Landlords with large property portfolios are struggling with exposure issues, where lenders are simply unwilling to finance any more of their property acquisitions.
This was the problem facing a client of Steven Westlake, owner of London-based mortgage brokerage Westlake Mortgages. His longstanding client has a portfolio of more than 100 properties and was finding that he had reached the maximum exposure limits of a number of buy-to-let lenders. So when he wanted to purchase an additional two properties, he asked Steve for help.
The two properties, both located in London, were being bought through a limited company, with one valued at £375,000 and the other valued at £350,000. Steve’s client was seeking loans at 75% loan-to-value (LTV) on both properties.
Steve’s client faced a number of challenges when trying to find a suitable lender.
His client had already hit portfolio exposure limits with a number of lenders. The properties were being purchased through a limited company structure and not all buy-to-let lenders are willing to lend to landlords on this basis.
The two properties were in a block of three, meaning his client would own two-thirds of the properties in one building, which is a risk some lenders do not like. To add to the complexities of the case, for tax reasons, the level of income declared on the applicant’s company accounts and SA302s was relatively low.
The valuation report had quoted rental valuation figures that were lower than anticipated, with a single Assured Shorthold Tenancy (AST) of £1,400 and a shared AST of £1,500.
With the guidance of 3mc Steve opted for Axis Bank, which was willing to accept the higher of the valuation figures, as the valuation report had stated that the two-bed purpose built maisonette was currently being shared with a rental of £1,500 pcm.
The deal was eventually agreed and Axis Bank, which has restricted distribution, provided a two-year fixed rate mortgage at 3.99% providing Steve with a procuration fee of 0.45% of the loan value.