Our client's situation
Our client was an experienced portfolio landlord with 13 properties and was looking to raise capital from their six-bedroom HMO. The funds were required to carry out improvement works across other investment properties.
The client wanted to borrow up to 80% loan-to-value (LTV) and had a clear short-term strategy. They expected to receive funds within the next two years, which would allow them to reduce the mortgage balance to 75% LTV or lower. Their income consisted solely of pension income and rental income.
Given their plans to reduce the borrowing within the next two years, the client's priority was securing the lowest available interest rate over the initial term, rather than minimising the overall cost of borrowing. They also wanted to avoid any application or valuation fees.
Our solution
After reviewing the available options, we recommended a solution which matched the client's objectives.
Key elements of the solution included:
1. A 3.80% two-year fixed rate
2. A 5% product fee added to the mortgage balance
3. No valuation fees or application fees, including on the lender's HMO products
4. Lending that supported borrowing above the client's target, with the total borrowing reaching approximately 85% LTV once the product fee was added
5. Portfolio landlord criteria that were well suited to the client's circumstances, with the lender comfortably accepting the wider portfolio
6. A pre-application assessment that provided reassurance around the property's rental income and affordability before the full application was submitted
The lender carried out a physical valuation to confirm the property's value. Thanks to careful planning and lender selection, the application progressed smoothly and a mortgage offer was issued within three weeks.
This case highlights the importance of understanding a client's priorities. While alternative options may have offered a lower overall cost, our adviser recognised that the client's focus was securing the lowest available rate over a short timeframe and tailored the recommendation accordingly.
This is for information only. Products and rates vary depending on your circumstances, lender criteria and products available at the time.
