A longstanding client approached us for a buy to let mortgage so that he could buy a one-bed flat on the first floor of a large, eight-storey block in the centre of Manchester.
On the advice of his accountant, the client, who has a very large portfolio of rental properties, is now making all buy to let purchases through an SPV limited company as this is the most cost effective way of running his lettings business.
The challenge we faced when finding a suitable lender hinged on the fact that the client is carrying forward losses from previous years to minimise his tax liability which means that his tax returns show insufficient income for many lenders which often impose a minimum income threshold of £25k pa.
We took the case to Keystone Property Finance which took a more pragmatic approach.
They could see that the client’s business generated lots of cash and that all of his outgoings were covered. The client was simply following his accountant’s advice in relation to his tax liability.
Unlike some lenders, Keystone’s valuers and underwriters and were also happy to approve the flat as security.
Many lenders steer clear of high rise blocks of flats but the building is centrally located, in a very state of good repair and, the client can demonstrate the successful letting of similar flats within his portfolio.
The client opted for the following deal:
Property value: £101,000
Loan amount: £79,200
Rate: 4.49% 3 year fixed
Term: 25 years interest only
Lender arrangement fee: 2% (£1,584)
Borrower: SPV Limited Company
Mortgage payment: £307 pcm
Rental income: £750 pcm
Gross yield: 9% pa
Consultant: Gavin Elley, 01625 416398