We were approached by a broker whose clients, a father and son operating via a SPV limited company, wished to remortgage two of their properties to repay the short term finance they had used during the purchase. They also wanted to raise capital for further investment.
The clients are experienced professional landlords with a portfolio of c90 properties. Their modus operandi is to regularly buy, refurbish and then refinance properties in order to expand their rental portfolio. This time the clients were seeking to remortgage a mid-terraced house and a first floor flat, both in East London.
However, with such a large portfolio, the clients were beginning to reach the overall lending limits set by many lenders. Also, they were keen to use a lender that would accept personal guarantees rather than require a debenture over the fixed and floating assets of the company.
Keystone’s Classic Range has flexible criteria and was able to accommodate the clients’ requirements. It has no limits on portfolio size, nor on client borrowing with other lenders, requiring only that total borrowing with Keystone remains at £2,000,000 or less. Also, Keystone accepts personal guarantees rather than taking debentures on limited company applications.
Additionally, by applying for a five year fixed rate product via a limited company structure, the clients were eligible for a 125% interest cover ratio stressed at the pay rate, allowing them to achieve 75% LTV and raise extra funds than would not have been possible with shorter term products.
The following terms were extended:
Property value: £453,500 & £445,000
Loan amount: £340,125 & £333,750
Rate: 5 Year Fixed rate 3.99%
Term: 20 Years interest only
RTI calculation: 125% @ 3.99%
Borrower: SPV Limited Company
Mortgage payment: £1,150 & £1,128 pcm
Lender arrangement fee: 2% added to the loan (£6,803 & £6,675)
Rental income: £1,600 & £1,400 pcm
Gross yield: 4.23% & 3.78% pa
Broker proc fee: 0.6% (£2,041 & £2,003)