£8 Million Mortgage, Portfolio of 8 Properties

• Client: British national and resident
• Portfolio: Eight properties in West London
• Property value: £20M
• Loan amount: £8M
• LTV: 40%
• Mortgage type: Interest-only
• Fixed rate: 2.79% for five years

Securing a substantial mortgage against an established property portfolio can become more complex where the borrower is over 65 and the primary source of income is rental income. Enness was approached by an experienced professional landlord looking to refinance a portfolio of eight properties in West London.

The portfolio was valued at approximately £20M, with the client looking to secure £8M of mortgage funding. This represented a 40% loan to value (LTV), providing a substantial level of equity across the portfolio.

The client was a British national and resident and had built significant wealth through a business operating in the second-hand luxury clothing market. At the time of the application, the client was 68 years old and the principal source of ongoing income was rental income generated by the property portfolio, amounting to approximately £600,000 per year.

Age can be an important consideration when arranging a large mortgage, particularly where a borrower is relying primarily on investment or rental income. Some mainstream lenders apply maximum age criteria or may take a more cautious approach where the proposed mortgage extends well beyond the borrower’s expected retirement age.

In this case, the relatively low 40% LTV and substantial rental income provided important context when assessing the proposed borrowing. The client was also an established property owner with a significant portfolio, allowing the application to be considered on the basis of the wider financial position rather than simply age or employment income.

Enness approached lenders with experience of high-value property portfolios and more flexible approaches to older borrowers. Private banks and specialist lenders can sometimes take a more holistic view of a borrower’s assets and income, although every application remains subject to the individual lender’s criteria.

Following negotiations, Enness secured £8M of mortgage funding against the £20M property portfolio. The facility was arranged on an interest-only basis and fixed for five years at 2.79% at the time.

The interest-only structure meant that the mortgage capital would not be reduced through monthly repayments during the interest-only period. This can help manage cash flow for property investors, but it also means that an appropriate strategy for repaying the outstanding capital is required.

The transaction demonstrates how property portfolio finance can be structured around an experienced landlord’s wider assets and income, including where the borrower is over 65. The relatively conservative LTV and substantial rental income were important factors in presenting the application to suitable lenders.

For property investors seeking a large mortgage against an established portfolio, specialist lender access can help identify financing options that take account of property values, rental income, age and the borrower’s wider financial circumstances.

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 and property portfolio investment carries risks, including changes in rental income, property values, interest rates, taxation and refinancing conditions. Interest-only borrowing does not reduce the capital balance during the interest-only period, so borrowers should have an appropriate and realistic repayment strategy in place.