| Loan amount | £960,000 |
| Purchase price | £1,280,000 |
| Loan-to-value | 75% |
| Property type | 4-unit freehold block |
| Location | North London (N4) |
| Borrower | First-time landlord |
| Term | 25 years interest-only |
| Rate | 5-year fixed |
| Lender type | Specialist MUFB lender |
The Story
Embarking on the journey of property investment as a first-time landlord can be both exciting and daunting, especially when the chosen property is a freehold block of flats. At Fox Davidson, we take pride in our recent achievement – successfully securing a buy-to-let mortgage for a first-time landlord aiming to purchase a freehold block comprising four flats. This case study sheds light on how our specialisation in complex property transactions, particularly freehold blocks of flats, enabled us to navigate challenges and fulfil the aspirations of a budding property investor.
The Challenge
Our client, a first-time landlord eager to dive into the world of property investment, approached us with a unique challenge – acquiring a freehold block of flats with four units. Such requirements come with their own set of complexities, especially for first-time landlords, as many conventional mortgage lenders are hesitant to lend to first time landlords purchasing this specific property type. This necessitated a specialised approach that Fox Davidson is renowned for.
Specialisation in Freehold Blocks of Flats:
At Fox Davidson, our expertise extends to the intricacies of securing mortgages for freehold blocks of flats. We recognise the unique challenges presented by this property type and work in close collaboration with specialist buy-to-let lenders who are well-versed in handling multi-unit properties. This specialisation ensures that our clients, even those venturing into property investment for the first time, can benefit from specialist mortgage solutions that align with the specific demands of their chosen investment.
The Solution
Full Financial Analysis:
Navigating the landscape of freehold blocks of flats requires a meticulous approach, particularly when dealing with first-time landlords. We conducted a full financial analysis, assessing factors such as rental income and the client’s assets and background income.
Collaboration with Specialist Lenders:
Understanding the hesitancy of conventional lenders, we strategically collaborated with specialist buy-to-let lenders who are open to working with first-time landlords seeking to acquire multi-unit properties. Our established relationships within this niche allowed us to identify lenders who value the potential of aspiring property investors and are willing to extend their support to those taking their first steps in the property investment market.
Navigating First-Time Landlord Challenges:
Being a first-time landlord comes with its own set of challenges, especially when it comes to financing complex property types. We worked closely with our client to address any concerns, offering guidance on the intricacies of managing multi-unit properties and assisting in the preparation of a strong and compelling mortgage application. Our goal was to not only secure the required financing but also empower the first-time landlord with the knowledge and support needed for a successful entry into property investment.
Conclusion:
Fox Davidson’s recent success in securing a buy-to-let mortgage for a first-time landlord acquiring a freehold block of flats underscores our commitment to specialisation in complex property transactions. Our ability to navigate the intricacies of funding freehold blocks of flats, collaborate with specialist buy-to-let lenders, and provide specialist solutions for first-time landlords sets us apart in the industry. As we continue to specialise in complex property types, including freehold blocks of flats, we look forward to advising more property investors to build their portfolios.
For more information visit our dedicated page on mortgages for freehold blocks of flats or do get in touch with one of our brokers. We secure mortgages on freehold blocks of flats across the UK.
Frequently asked questions
How is rental income assessed for a buy-to-let mortgage?
Lenders use the Interest Coverage Ratio (ICR), typically requiring rental income of 125 to 145 percent of mortgage interest at a stress rate. Higher-rate taxpayers in personal name usually work to 145 percent ICR; basic-rate taxpayers and limited company applications usually work to 125 percent.
What deposit do I need for a buy-to-let mortgage?
Standard buy-to-let mortgages require a minimum 25 percent deposit (75 percent LTV). Some specialist lenders go to 80 percent LTV. HMO and MUFB products typically cap at 75 percent LTV.
Should I buy through a limited company or personal name?
For higher-rate taxpayers building a portfolio, a limited company structure is usually more tax-efficient because mortgage interest is fully deductible against profit at corporation tax rates. Setup and accounting costs are higher, so the benefit is clearest from £200,000+ of gross BTL income.
How long does a buy-to-let mortgage take to complete?
A complete buy-to-let mortgage application typically takes four to seven weeks from application to drawdown. Limited company and portfolio cases sometimes take longer where the wider portfolio needs underwriting.
Further reading: buy-to-let mortgage broker, MUFB mortgages guide, buy-to-let mortgages UK, London mortgage guide.
Completed transaction. This case study describes a live deal arranged by Fox Davidson. Client details are anonymised and figures rounded.
All rates and terms are indicative and subject to individual assessment, lender criteria and property valuation. Your home may be repossessed if you do not keep up repayments on a mortgage.
Buy-to-let, HMO, MUFB, and serviced accommodation finance. Specialist landlord broker.