- Client: UK resident and Chinese national
- Property portfolio: Residential and buy-to-let properties valued at £10.4M
- Finance: Five interest-only mortgages totalling £6,514,500
- Residential LTV: 75%
- Buy-to-let LTV: 65%
- Residential rate: 2.09% fixed for two years
- Buy-to-let rate: 2.59% fixed for two years
Property investors looking to expand their portfolios can sometimes face a challenge when they want to raise capital before identifying their next acquisition. Conventional lenders will often want to understand the intended purpose of borrowing before releasing funds, particularly where the required facility is substantial.
Enness was approached by a Chinese national who was resident in the UK and had built a property portfolio worth approximately £10.4M. The portfolio comprised a mixture of residential and buy-to-let properties, predominantly located in London and the surrounding commuter belt.
The properties were mortgage-free, giving the client significant equity that could potentially be used to raise capital. The client wanted to expand their buy-to-let portfolio but did not yet have a specific property purchase lined up.
Instead, the objective was to release as much capital as possible from the existing portfolio so that the client could act quickly when a suitable investment opportunity became available. Having access to funds in advance would allow the client to approach future purchases from the position of a cash buyer.
This created an important challenge. Many mortgage lenders require borrowers to provide a clear purpose for the funds being raised, particularly where a significant amount of capital is involved. The client was looking to raise approximately £6.5M without having a specific acquisition identified.
The client’s income profile added another consideration. A significant proportion of their income was generated through their own company in China, meaning the lender would need to assess overseas income alongside the client’s wider financial position and existing UK property assets.
Enness considered how the client’s portfolio could be structured to maximise the available borrowing while maintaining a suitable repayment profile. Rather than arranging a single facility, the finance was structured across five separate mortgages with the same lender.
The resulting arrangement comprised two residential mortgages and three buy-to-let mortgages, all structured on an interest-only basis. The combined property value was approximately £10.4M, against which Enness secured total mortgage funding of £6,514,500.
The residential properties were financed at up to 75% loan to value (LTV), while the buy-to-let properties were financed at 65% LTV. The residential mortgages were arranged at 2.09% fixed for two years, while the buy-to-let mortgages were arranged at 2.59% fixed for two years at the time.
Importantly, the client was able to draw the full facility without having a specific property purchase in place. This provided the liquidity required to pursue future investment opportunities and meant the client could approach potential acquisitions with funds already available.
The case demonstrates how buy-to-let mortgage finance can be structured alongside residential mortgages to leverage an existing property portfolio. For investors with substantial property equity, a carefully structured portfolio refinance may provide access to capital for future acquisitions, subject to lender criteria, valuation and affordability.
For international property investors with overseas income or complex financial circumstances, specialist mortgage expertise can also help identify lenders able to consider the wider financial position rather than relying solely on standard lending 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. Property investments can also be illiquid and may take time to sell. Interest-only borrowing does not reduce the capital balance during the interest-only period, so an appropriate repayment strategy should be in place.
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.
