A client recently approached Enness for assistance with a residential remortgage. During the review of their wider property portfolio, it became apparent that one of their buy to let properties was approaching the end of its existing mortgage product and would soon revert to the lender’s standard variable rate (SVR). We therefore explored the option of refinancing the investment property onto a more suitable product.
As well as securing a new mortgage arrangement, the refinance provided an opportunity to raise additional capital to support the client’s plans to expand their property portfolio. The property was a three-bedroom house in Oxford, valued at approximately £450,000.
There were several considerations when assessing the available options. Buy to let affordability is influenced by the rental income generated by the property, and changes to lender stress testing can affect the amount available to portfolio landlords. In this case, identifying a product with suitable rental coverage was important to achieve the required borrowing.
The proposed capital raising also required careful consideration. Lenders will generally want to understand the intended use of additional funds, particularly where the purpose is to support further property investment. Portfolio landlords may not always have identified their next purchase at the point of refinancing, which can make this type of application more difficult to structure.
Enness identified a lender that was comfortable considering capital raising for portfolio expansion and offered suitable terms. Although the lender’s usual processing times were longer than the client required, Enness worked with the lender’s business development team to help progress the application within the necessary timeframe.
OUR SOLUTION
The client secured a buy to let refinance at 75% loan to value, with a 5-year fixed rate of 3.79% over a 27-year term. The arrangement provided a new mortgage product while also releasing capital that could be used towards the client’s future investment plans.
Enness also introduced the client to a solicitor from its professional network to support the wider remortgage process. The case demonstrates how reviewing a client’s wider property position can uncover opportunities to restructure existing borrowing while preparing for future investment.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, property suitability and lender criteria. Terms, rates, LTVs and availability may vary depending on individual circumstances.
Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
