In this case, our Brokerplan Network Partner’s client set up an SPV to acquire a residential property that will be let to a local charity to home vulnerable individuals and families on a new 10 year lease. This restricted the number of lenders who would support the acquisition as it is viewed as “reputational risk” for their lending if they ever had to serve a repossession order. The client had minimal BTL experience and required the longest term & maximum LTV possible.
Our Network Partner initially began speaking with specialist buy to let lenders who are more open to lending when there are vulnerable tenants. The length of the new lease with the charity precluded them. The Partner then approached the high street banks and specialist lenders, but were declined for a number of reasons; either due to the nature of the tenants, lack of experience for the applicant, serviceability based on the rental income and also the covenant strength of the charity.
Our partner was left with only one option to present to the client which was a commercial mortgage with the niche bank Cambridge and Counties. Fortunately, the terms for a commercial investment are relatively prime and the client was happy to proceed.
Loan size £409,500 on a 25 year term at 4.5%+base rate.
Total case income £7,595
Income split 30/70 – 70% to the Brokerplan Network.