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Periodically, we come across cases that we believe property investors would be interested to learn about. The summary below is one such case. We hope you find it helpful.
The Property
This property was a multi-unit freehold block of flats (MUFB) consisting of 23 separate units situated on a commercial high street.
The 23 units consist of 16 commercial shops and 7 residential flats. Furthermore, all of the commercial units were below 30sq meters, ranging from 10-20 sq meters and 5 of the 7 flats ranged from 18-25 sq meters which excludes the majority of lenders.
For many lenders in the market, there is not much of an appetite to lend on these types of properties. Therefore, the level of expertise required to be able to find a solution is far greater than the knowledge needed to place a deal for a simple BTL mortgage.
Fortunately, here at Advocate Finance as specialist advisers, we were able to complete the above case with very few issues from start to finish. The key points are as follows:
Client Background
Our client is a very experienced landlord who has been letting this property out for over 20 years. They have successfully managed the changeover of tenants in both the commercial and residential units for many years now without any voids. They also own two other multi unit blocks, one being solely residential flats and another a mixed-use premises.
Client’s Requirements
Our client wanted to refinance this property which was held in their personal name, to not only improve the current interest rate that they are on (due to their existing fixed rate expiring and now being on the much higher variable rate) but to also raise some further capital to invest into their property portfolio.
They were estimating the property to be worth £2 million, with an outstanding mortgage of circa £860,000. The property generates circa £160,000 a year in rental income.
Solution
After speaking with the client and understanding what they wanted to achieve, I reached out to the appropriate semi-commercial lenders that can lend on this asset class with a full client/property referral, so we knew exactly what options we had to choose from when presenting the client with the quote.
We proceeded with the most competitive option and instructed the valuation. The property was valued at £1,725,000, with a vacant possession value of £1,500,000 and the lender was able to provide a net loan of £975,000 on this occasion, which allowed the client to redeem the existing mortgage but also raise circa £115,000 for further property investment / existing property improvements. This lender was able to use title insurance during the legal process which saved the client a huge amount of time and enabled the loan to be completed within a few weeks of the offer being issued. Without this being available, it could taken 8-12 weeks to complete a full title investigation on such a complex property.
Client Feedback
“Suffice to say I was very happy with the options and subsequent service provided by Henry, which was excellent. If I do decide to arrange another re-mortgage or finance another project, Henry will most certainly be my first port of call.”
How can Advocate Finance help?
Are you looking at refinancing a semi-commercial property with the view of improving your current interest rate and raising capital at the same time?
Whether you need a mortgage on a property you already own or for something similar to purchase a new investment, we will be able to find you a solution to meet your specific needs.
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.
