This was the issue facing Peter Storey, owner of Kent based PLS Mortgage Solutions, when he was asked by a client to refinance a portfolio of properties she owns in the South East.
Her investments consist of a single block of seven individual flats, each with their own leasehold, valued in total at just over £2.7m. She also owns four further flats which are on one freehold title, valued at £1.37m.
The properties were mortgaged for £2.3m and Peter’s client wanted to raise a further £623,000 to invest in additional properties.
Peter Storey explains the challenge finding appropriate mortgage finance: “When my client had originally acquired her properties, they were let out as standard rental properties and she had no difficulty obtaining buy-to-let finance.
“However, over the past 10 years she has moved away from traditional longer-term rentals in favour of short-term lets, either holiday lets or to local companies seeking accommodation for employees. This made the task of finding suitable mortgage finance considerably more difficult, as most buy-to-let lenders will not consider short-term lets of this nature.
“I have worked with 3mc for many years and I knew they were very knowledgeable when it comes to this type of application. I could have spent a lot of time contacting various lenders myself, but it was far easier to work with 3mc who knew which specialist lenders were willing to consider this deal.
We identified InterBay Commercial from a short-listed panel of prospective lenders and submitted the application to them for consideration.
“InterBay was willing to do the deal as a 10-year interest-only mortgage at a rate of 4.95%. 3mc is an InterBay Gold Key Partner, which meant we were able to benefit from enhanced commercial terms, a priority level of service from the lender and an enhanced procuration fee.”
Refinancing a portfolio of short-term rental properties is more challenging because only a few lenders are active in this market. However, that doesn’t mean it’s impossible and, with some specialist help, most brokers should be able to successfully find a home for this type of deal on behalf of their clients.