| Loan amount | £2,100,000 |
| Property value | £3,000,000 |
| Loan-to-value | 70% |
| Property type | Freehold block (20 units) |
| Location | Birmingham (B16) |
| Term | 25 years interest-only |
| Rate | 5-year fixed |
| Lender type | Specialist MUFB lender |
The Story
Securing mortgages on complex property investments requires a certain level of expertise. At Fox Davidson, our recent achievement in securing a substantial buy-to-let mortgage for a professional property investor looking to refinance a freehold block of flats with 20 units exemplifies our commitment to navigating intricate scenarios. This case study delves into how we specialise in securing mortgages for complex property transactions, particularly in the specialist lending area of freehold blocks of flats.
The Challenge
Our client, a seasoned professional property investor, approached us wishing to remortgage and capital raise on a freehold block of flats containing 20 units. This type of investment, while lucrative, comes with its own set of complexities, and mortgages for such scenarios require a specialised approach. Traditional lenders often shy away from such large-scale buy-to-let lending, making it essential for our client to work with a mortgage broker that specialises in mortgages for large freehold blocks of flats.
The Solution
Fox Davidson’s specialisation in securing mortgages for freehold blocks of flats was exemplified in this case study. Recognising the intricacies involved, we collaborate with specialist buy-to-let lenders who are well-versed in handling the unique challenges posed by these types of investments. Our established relationships with these lenders enable us to tailor solutions that align with the specific needs of property investors seeking to acquire entire blocks of flats.
Full Property Analysis:
Navigating the complexities of acquiring a freehold block of flats demands a thorough understanding of the property itself. We conducted an in-depth analysis of the 20-unit block, considering factors such as current rental income, surrounding area, unit size, accessibility, EPC rating amongst other criteria that lenders would determine if a lender would lend. This full assessment formed the foundation for presenting a compelling case to potential lenders.
Valuation.
When it comes to freehold blocks of flats of this size it is possible to secure an investment valuation rather than a bricks and mortar valuation. There are a handful of lenders in the UK who will lend on the investment valuation rather than the (lower) bricks-and-mortar valuation. Our client wanted to maximise borrowing as this was a remortgage and raising the maximum loan possible was our client’s goal. Therefore, we suggested to our client that we use a lender that would work from the investment valuation of the block.
Specialist Buy-to-Let Lender Collaboration:
Our expertise in dealing with freehold blocks of flats allowed us to approach specialist buy-to-let lenders who cater specifically to complex properties including mortgages on multi-unit freehold blocks (MUFB). These lenders not only have a deeper understanding of the intricacies involved in managing such properties but also offer specialist mortgage solutions that align with the unique requirements of professional property investors.
Negotiating Favourable Terms:
Securing a large buy-to-let mortgage for a freehold block of flats necessitated adept negotiation skills. We engaged in discussions with the chosen lender, articulating the merits of the investment, the client’s track record as a professional property investor, and the potential for long-term financial success. Our goal was to negotiate terms that would not only meet the client’s immediate financing needs but also position them for success in their broader investment strategy.
Success in Property Investment:
Our collective efforts culminated in success as we secured a 75% loan to-value buy-to-let mortgage for our client, enabling them to proceed with the remortgage of the 20-unit freehold block of flats. The lender recognised the value and potential of the investment, offering favourable terms against an investment valuation that aligned with the client’s financial goals and investment strategy.
Blocks of this size sit in a narrow band of the market. More than six units rules out most buy-to-let lenders, and at twenty units you are into commercial underwriting whether you like it or not. We place perhaps a dozen blocks of fifteen units or more each year, and the lender shortlist rarely runs past four names.
Frequently asked questions
What is a high net worth mortgage?
A high net worth (HNW) mortgage is assessed under the FCA’s high net worth rules rather than the standard affordability test. It is available to borrowers with net assets over £3 million or annual net income over £300,000. Lenders read the net assets test literally and include the equity in your main home, and on a joint application only one of you needs to meet it.
How does HNW mortgage assessment differ from a standard mortgage?
HNW assessment is whole-of-wealth based rather than income-multiple based. Lenders consider total assets, liabilities, liquidity, income, and lifestyle costs, then negotiate loan size based on the overall financial picture.
What loan sizes are available with HNW mortgages?
HNW mortgages typically start at £1 million minimum and have no upper cap. Loans of £5 million to £20 million are routine for qualifying clients. Loans above £20 million typically involve syndicated lending or relationship-driven arrangements with private banks.
How long does an HNW mortgage take to complete?
HNW mortgages typically complete in four to ten weeks. Mainstream HNW lenders are at the faster end. Private bank cases involving committee approval, complex structuring, or offshore elements can take eight to twelve weeks.
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.
Specialist mortgage advice for property professionals, high earners, and HNW clients across the UK.