When they came to us, our clients owned one unencumbered buy-to-let (BTL) and were looking to remove equity from this property in order to generate a deposit to purchase a second.
There were a number of difficulties associated with this case:
- Our clients were looking to pay as much of their mortgage on an interest-only basis as possible; with an LTV of 85%, this was
- The BTL they were looking to purchase was next door to their main residence
- We also needed to find a lender who was happy with our client using the capital raised from the first mortgage to provide the deposit for the second
Arranging the first mortgage on our clients’ current BTL was not overly difficult and we were able to secure them a loan for the required amount at a competitive rate.
The second mortgage presented more difficulty due to the fact that the property was next door to our clients’ main residence and that they wished for as much of the loan to be repaid on an interest-only basis as possible. On this occasion, however, having surveyed the market and approached a variety of lenders specialising in this area, our broker was able to find one who was willing to provide our clients with a mortgage that met all of their requirements.
The first mortgage was a five-year fixed, capital-repayment mortgage with a rate of 2.4%. Our clients were then able to use these funds as a 15% deposit for their new BTL mortgage, while also covering any legal fees and renovation costs associated with the purchase of their new BTL property.
The second mortgage was a five-year fixed loan with a rate of 2.49%. Of this 85% LTV loan, 75% was to be paid back on an interest-only basis, and the remaining 10% was to be paid back as a capital-repayment loan. This product perfectly satisfied our clients’ requirements, and they were able to purchase the property they desired while keeping their monthly mortgage payments down to what they considered to be an acceptable level.