- Client: UK expat based in Hong Kong with an established UK buy-to-let portfolio
- Properties: Two new-build West London flats valued at £1,252,500 and £1,255,000
- Challenge: Required 75% LTV despite owning five existing buy-to-let properties and purchasing the new-build properties through a limited company
- Finance: 75% LTV across both properties at 3.99% fixed for five years over a 25-year interest-only term, with no early repayment charges
Financing additional buy-to-let property can become more challenging where an investor already owns a substantial portfolio, particularly when the borrower is resident overseas and the new properties are being purchased through a limited company. Enness was approached by a UK expat based in Hong Kong who was looking to expand an established UK buy-to-let portfolio.
The client held a senior position with a large multinational bank and already owned five buy-to-let properties in the UK. Having previously arranged finance across the portfolio, the client was looking to purchase two further properties within the same new-build development in West London.
The two flats were valued at £1,252,500 and £1,255,000 respectively. The client had already raised funds from the existing portfolio to cover the deposits for both purchases before the development was complete. The remaining requirement was to secure mortgage finance for the balance of the purchase price.
The existing portfolio created the main lending challenge. Under the portfolio underwriting requirements applicable at the time, landlords with multiple mortgaged properties could face additional scrutiny of their existing portfolio, including assessment of rental coverage. In this case, the existing five-property portfolio did not meet the required rental calculation used by many lenders.
The client’s overseas residency and the proposed purchase through a limited company added further considerations. Finding a lender prepared to offer the required level of borrowing while taking a different approach to the existing portfolio was therefore essential.
Enness identified a lender with a more flexible approach to background portfolios. Its lending structure allowed the client’s existing properties to be assessed differently from the conventional approach used by many other lenders, creating an opportunity to consider the proposed acquisitions despite the portfolio’s rental coverage position.
Following discussions with the lender, Enness secured 75% loan to value across the two new-build properties. The resulting facility was arranged at a fixed rate of 3.99% for five years over a 25-year interest-only term.
The mortgage was also secured without early repayment charges, providing the client with additional flexibility when managing the two properties and the wider portfolio.
The case demonstrates how buy-to-let mortgage finance can become more complex for landlords with established portfolios, particularly where the borrower is resident overseas and additional properties are being acquired through a company structure.
For international property investors looking to expand an existing portfolio, specialist property portfolio finance can help identify lenders with experience of more complex portfolio structures and different approaches to background properties.
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, valuation and lender criteria. Terms, rates, LTVs, fees 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. Buy-to-let investments involve risks including changes in property values, rental demand, void periods, maintenance costs and financing conditions. Interest-only mortgages require a suitable strategy for repaying the capital at the end of the mortgage term.
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.
