| Loan amount | £1,850,000 |
| Portfolio value | £3,400,000 |
| Loan-to-value | 60% |
| Property count | 11 properties |
| Location | Bristol (BS3-BS6) |
| Term | 25 years (part interest-only) |
| Rate | 5-year fixed |
| Lender type | Specialist portfolio BTL lender |
| Borrower | Professional landlord |
The Story
Fox Davidson were approached by a client wishing to re-finance a multi-million-pound property portfolio in Bristol.
The portfolio of over 60 properties comprised of residential and commercial property, including student-let HMOs, short lease semi-commercial property, as well as family residential lets.
The Challenge
The challenge with securing large property portfolio finance is assessing the stock for condition, tenant profile, length, type of lease, and location.
Lenders have criteria with regards to the maximum loan to value, the maximum amount of commercial property in a portfolio, the tenancy type, and the loan-to-value.
The portfolio was part-owned in personal names and part-owned in an SPV Ltd company.
Their accountant had advised incorporating the whole portfolio and therefore the refinance would encompass some refinancing and some purchases from personal to corporate ownership.
The lending came in at 63% loan-to-value and our client required an element of interest-only.
The Solution
Fox Davidson work in the large loan arena and have some very good relationships with private banks and ‘challenger’ banks.
Funding large property portfolios requires an in-depth assessment of the stock, the yield and the lease terms of each property.
Having worked through the portfolio and having crunched the numbers, we were able to place the case with a bank that offered 50% interest-only, remainder capital and interest, and a fixed rate just above 3% for five years.
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.
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.