- Client: UK residents relocating to Hong Kong
- Property: London flat in Holborn valued at £5M
- Challenge: Required a large buy-to-let remortgage while relocating overseas, with a change from interest-only to capital-and-interest borrowing
- Loan amount: £2.6M
- LTV: 52%
- Interest rate: 1.89% above Bank of England Base Rate at the time
Arranging a large buy-to-let mortgage against a prime London property can become more complex where the borrowers are relocating overseas and require a bespoke repayment structure. Enness was approached by a couple looking to refinance a £5M apartment in Holborn before relocating to Hong Kong.
The property was situated in central London and valued at approximately £5M. The clients were looking to secure mortgage funding of £2.6M, representing a relatively conservative 52% loan to value (LTV).
Although the LTV was not particularly high for a property of this value, the proposed structure created a number of considerations for lenders. The existing mortgage was arranged on an interest-only basis, while the clients wanted to refinance onto a capital-and-interest structure, meaning the monthly payments would cover both interest and a portion of the outstanding capital.
The clients were also preparing to relocate to Hong Kong. This meant that the property would no longer be their primary residence and would instead be retained as a rental investment. The change in intended use meant that the new mortgage would be a non-regulated buy-to-let facility.
The client’s employment circumstances added another layer to the application. One of the borrowers was a Managing Director at a leading international investment firm and was due to take up a new role in Hong Kong. As part of the move, the remuneration structure would change, including the loss of an established bonus history and the introduction of a sign-on bonus. Some lenders can take a more cautious approach when assessing new or variable elements of remuneration.
The clients were also looking to raise additional capital as part of the refinancing. The funds were required to support the purchase of a business partner’s interest, meaning the transaction needed to accommodate both the buy-to-let refinancing and the wider capital requirement.
Enness approached lenders with experience of large buy-to-let transactions and complex borrower circumstances. The objective was to identify a lender comfortable with the property value, overseas relocation, changing income structure and proposed capital-and-interest repayment profile.
The resulting arrangement provided the clients with £2.6M of mortgage funding against the £5M Holborn property, representing 52% LTV. The mortgage was secured at a rate of 1.89% above the Bank of England Base Rate at the time.
The structure provided a long-term financing solution for the property while allowing the clients to retain the London apartment as a buy-to-let investment following their relocation to Hong Kong. The application was also able to proceed despite the change in the borrower’s remuneration structure.
The transaction demonstrates how a buy-to-let remortgage can be structured around the wider circumstances of high-value property owners. Overseas relocation, changes to income and remuneration, large loan requirements and capital-raising objectives can all affect lender appetite, even where the underlying LTV is relatively conservative.
For property owners looking to refinance a high-value London buy-to-let property, specialist mortgage expertise can help identify lenders able to consider the property, borrower profile and intended repayment structure, subject to valuation, underwriting, affordability and lender criteria.
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, valuation, property suitability, due diligence and lender criteria. Terms, rates, LTVs, fees and availability may vary depending on individual circumstances.
Risk Warning:
Property securing finance may be repossessed if repayments are not maintained. Property values can fall as well as rise. Buy-to-let investment carries risks, including changes in rental income, property values, interest rates, taxation and refinancing conditions. Borrowers should also consider the implications of capital-and-interest repayments and ensure that the proposed borrowing remains affordable.
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.
