It can quite often be the case that a landlord has a long-term tenant who is paying less than the market rent. The reasons for this may be that the value of having a good, clean, reliable tenant that looks after your property outweighs an annual increase in rent to match the market rent.

Unfortunately, most buy-to-let lenders will calculate based on the market rent or the actual rent being charged, whichever is lower. When we have a scenario where the actual rent charged is not sufficient compared to market rent, we need to utilise one of only a handful of lenders who will work from market rent.

Location: Bristol

Loan Amount: £295,000

Finance Category: Commercial Property Finance

The Story

Our client had been let down by their current mortgage lender as they were unable to lend the full 75% loan required. The rent being charged was beneath the market rent for properties in that area, and their current lender would only recognise the actual rent being charged.

The Challenge

Most mortgage lenders do work from the lower of either the actual rent or the market rent for a property. This can be a problem for clients that have not increased the rent they charge in line with the market rent for an area. Fox Davidson needed to utilise a lender that would work from market rent, as there was actually a large difference between the two amounts.

The Solution

Fox Davidson specialise in buy-to-let mortgages and have access to lenders across the market, including high street banks, building societies and many exclusive broker-only lenders.
We placed the client with a regional building society, one which was happy to use the market rent for the area, rather than the actual rent being charged.
The lender’s rationale is that in the event of repossession, the property would be sold on the basis it could achieve market rent, much like any other property in the area.
Fox Davidson secured a 75% loan-to-value mortgage on a 5-year fixed rate at 2.09%.

Fox Davidson

Fox Davidson are a specialist buy-to-let mortgage broker in Bristol. We have offices in Bristol, London and across the Southwest. Call us on 0117 989 7950 to discuss your buy-to-let mortgage options.