Find out how we helped our client capital raise to repay a director's loan and secure a lower rate
The Client:
A married couple who are directors of their Trading Limited Company. Both are highly experienced landlords who own this property and a commercial unit.
The Property:
A multi-unit freehold block (MUFB) consisting of five self-contained flats in a city centre location.
The Finance:
Our clients were looking to refinance their property to secure a lower rate and raise capital to repay a director’s loan.
The Challenge:
A few challenges with the property made placing this case with the right lender more complex.
The primary issue was that the building had a single supply for its utility services as opposed to an individual supply for each unit within the multi-unit property. Most lenders are uncomfortable with this setup as it can make it trickier to resell the multi-unit property, so the number of lenders we could approach was limited.
The number of lenders that would consider this case was further restricted by the fact that our clients were applying via their Trading Limited Company. Most lenders will only accept applications from SPV Limited Companies, which are solely set up for buying, selling, and renting out property, as these are much easier to underwrite.
The Solution:
The clients had already gone through the application process with a different broker who had failed to find a lender comfortable with their circumstances, so it was extremely important to us that we source a deal for them and end their stress.
Our knowledge of specialist lending criteria and whole-of-market access meant we could quickly identify which lenders we could approach with this case. MFB has dedicated underwriters and BDMs with some of the leading specialist lenders, which helped to speed up this sourcing stage. We discussed this case with an underwriter, allowing us to talk through the challenges and reassure the lender of the case's stability.
As a result, we were able to find a great lender who was happy to offer to our clients, securing a competitive rate in the process. Here are the details:
Property Details
Property value: £260,000
Loan amount: £180,000
LTV: 70%
Rate: 5.14%, fixed for two years
Term: 25 years, interest-only
Mortgage payment: £798 per calendar month
Lender arrangement fee: £6,300
Rental income: £3,300 per calendar month
Gross yield: 15% per annum
Application: Trading Limited Company
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