A couple recently approached me as they were looking to purchase a £2 million buy to let property in Central London at 65% loan to value (LTV). They had previously owned buy to let properties and had just sold one, which was to be the deposit for the new property. These clients also lived in Central London and owned two limited companies with very strong net profits, of which they drew little income from.
They were currently renting and did not own any other properties, which can make things very difficult when buying such a large property. This generally raises concerns with lenders that a client may be trying to get a larger mortgage to live in the property themselves, as buy to let mortgages tend to be less focused on income and affordability and more so on rental income, compared to residential mortgages.
Because of this, it was my job to present the case to a lender and prove they would have been able to buy it as residential property if they needed to.
It was clear from the company net profits that I could have secured lending at 4.5 times my client’s income with a different lender, so there would be no reason for them to purchase with a buy to let mortgage at a higher rate – (it would have actually been cheaper for them to buy on a residential basis).
My clients were also tied into a tenancy agreement for a number of years and their current property was bigger than the new purchase, not to mention more suitable, as it was closer to their children’s school.
Based on all of the above, I was able to pitch the case to a lender who was happy to lend at a competitive fixed rate of just 3.24% and complete within just four weeks.
This was an excellent result for a £2 million buy to let mortgage at 65% LTV, which was also on total interest only.
This worked extremely well for my clients as it meant they were able to receive additional income from the rent on the buy to let, making their lifestyle even cheaper.
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