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Lending success story

This week's case study highlights how Alexander Hall helped a client release equity to start a property portfolio.

Our clients' challenge

Our clients had come in to some money and were keen to start a property portfolio. They acquired their first property with cash and invested further personal funds in order to complete the refurbishment necessary to then rent it out to tenants. Their intention was to then raise money against that property through a mortgage, in order to acquire another rental investment. The scenario faced a number of challenges. Our clients did not have long term experience as landlords, they did not at the time have any consistent form of income, nor did they own their own main residence, all of which tend to be minimum requirements for buy to let lenders. In addition, a key factor was the rental yield of the property. Our clients wished to release as much equity as possible for further investment, but for many lenders, the rental stress test calculations meant they were being offered a lower amount than desired.

Alexander Hall's solution

We sourced a lender who would offer a buy to let mortgage on a ‘triple borrower – joint proprietor’ basis, meaning there were three people on the mortgage application but only two on the title deeds of ownership. This involved the client’s mother joining the mortgage application; she was in full time employment and owned her own home, which satisfied the issues relating to income and home ownership. Having taken tax advice, she confirmed that through being on the mortgage, but not on the property title deeds, she was not liable for any stamp duty surcharge. Owing to the sum of her personal disposable income, the lender was also able to be more flexible than others with the amount of lending, effectively combining this with the anticipated rental in order to offer the sum of lending required. This was quite a complex scenario and having got their first property tenanted and funds available, our happy clients are well on their way to finding new investment opportunities.

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