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The Client’s Situation
An experienced property investor approached us to refinance eight buy-to-let properties which were currently unencumbered. The client was looking to refinance these small HMOs to release equity to invest back into their portfolio. He liked the idea of having one mortgage payment to cover these properties.
The client’s objectives were clear:
- Complete the refinance as quickly and efficiently as possible
- Reduce borrowing costs
- Minimise upfront fees
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The Challenge
Each property was of relatively low individual value, which meant that if we were to refinance each property individually, they would fall into the lower loan size bracket with higher interest rates with lenders.
If we had refinanced each property individually, we would also have incurred additional costs for valuations and legal fees.
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Our Solution
Rather than refinancing each property separately, we structured the transaction as a portfolio loan, combining all 8 buy-to-let properties into a single facility.
By increasing the overall loan size, the client became eligible for a lower interest rate, despite the modest value of the individual units. All eight properties also met the lender’s criteria for Automated Valuation Models (AVMs), eliminating the need for physical inspections and the additional costs associated with valuations.
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The Result
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Significant Cost Savings – As all properties passed AVM requirements, no physical valuations were required, saving the client approximately £4,000 in valuation fees.
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Streamlined Legal Process – Due to this being a portfolio loan, legal costs equated to be £587.50 + VAT per property. There was also no Independent Legal Advice (ILA) required, saving both time and additional expense. Compared to individual legal fees for a limited company, which including ILA, can be on average £1,250+VAT per property mean a saving on legal fee of over £6,000.
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Faster Completion – Title insurance was used in place of more extensive legal investigations, enabling the application to complete within a couple of weeks of receiving the mortgage offer.
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How can Advocate Finance help?
Looking to refinance your portfolio? Or purchase a new buy to let property? We will find the most time and cost efficient route for you.
We provide a FREE assessment on all our services.
Please contact me directly for more information, or use the Get in Touch With Us Today feature at the bottom of this page.
