Moving a high-value residential property onto a buy to let mortgage can become significantly more complex when the existing borrowing is substantial and additional capital is required.
I recently assisted a client who owned an £8 million residential property in Central London, secured by both a first and second charge. The first charge was approximately £2.5 million with a private bank, while the second charge was £500,000.
The client wanted to raise a further £750,000 to fund the purchase of an investment property. The proposed structure involved consolidating the existing borrowing into a single buy to let facility, while also releasing the additional capital required for the onward purchase.
The client planned to move in with a family member and rent out the existing property. However, several aspects of the application made the case more complicated. The overall loan size was significant, the existing second charge needed to be incorporated into the new facility, and the client wanted the additional £750,000 available from completion so they could purchase the next property as a cash buyer.
The client’s income profile added another layer of complexity. Income was generated through several UK and overseas sources, while some of the companies from which the client drew income had recorded losses. A lender therefore needed to consider the client’s wider wealth and financial position rather than relying solely on conventional income assessment.
OUR SOLUTION
After reviewing the available options, I identified a lender that was prepared to take a broader view of the client’s overall wealth. The client had substantial assets held within their company, while an accountant’s reference provided further supporting evidence for the application.
We also provided a tenancy agreement for the existing property, giving the lender additional reassurance around the proposed rental strategy.
The lender was ultimately comfortable with the proposed structure and I negotiated terms that allowed the existing first and second charges to be consolidated while providing the additional capital required for the onward investment.
The case demonstrates how releasing equity from property can form part of a wider investment strategy for clients with significant property wealth. It also highlights the importance of working with a lender prepared to assess complex income and substantial assets on their individual merits.
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.
