Case studies

Buy To Let Case Study 1

The case
Care must be taken when dealing with applications for Limited Companies as it is not always straightforward.

A common route for buy to let is a company that has been set up as a Special Purpose Vehicle (SPV), for the purpose of buying and renting out properties however there can be pitfalls. As an example in a recent case the SPV had been set up to include 2 directors who are husband and wife and 2 shareholders who are the director’s children, each having 25% shareholding of the company.

An application was made by the directors to purchase the company’s first Buy to Let property, however they did not want their children included on the mortgage. They could not find a lender that would not insist that all the shareholders (including the children) should be party to the mortgage, and therefore jointly and severally liable.

Is there a solution?
Whilst it is true that nearly all lenders insist that all directors and major shareholders of a Limited company must be party to the mortgage, our market expertise enabled us to provide an immediate solution, as we are aware of the one company that considers applications on the basis that it is only company directors that need to be on the application. 

Buy To Let Case Study 2

The case
Converting a Freehold house into flats is another area where market expertise is essential to save time and find the best product as this example shows.

An applicant had converted their large Victorian house into 4 separate self contained flats. All the relevant planning permission and regulations were obtained and adhered to during the conversion process. Having completed the project the applicant wanted to re mortgage the property to release some of the equity and personal capital now tied up in the property. He was, however, unsure of how to go about this and wanted to know what options he might have.

Is there a solution?
The following suggestions were given:

A) To retain the property as one Freehold unit, which would mean only one valuation report would be needed and one set of solicitor and lender fees, reducing the set up costs. There are some lenders that will consider a property in this format. The property in this instance would remain under single title.

B) The second option was, having complied with building regulations creating totally separate units, to take the opportunity of creating separate titles with long leases for the units which, whilst more costly than the first option, could result in higher aggregate valuations being achieved and therefore greater borrowing potential. This would also introduce a degree of flexibility for the future enabling units to be sold separately or mortgaged individually.

Buy To Let Case Study 3

The case
There are more and more younger people considering Buy to Let. Requests are even being received from the individuals who do not yet own their own home, i.e first time buyers.

We were recently presented with the following scenario:
An 18 year old applicant wanted to purchase their first property as a Buy to Let to get onto the housing ladder. The only income being received was £15,000 per annum, additionally the applicant did not want to prove income as he has not kept all of his payslips over the last 12mths and did not want his employer to be involved in what was regarded as a private affair.

Is there a solution?
With no mortgage repayment history the applicant realised the chances of obtaining a Buy to Let mortgage was slight but nevertheless, we were able to offer facilities with 3 different lenders, and therefore a range of product options.    

For further details please contact us.