For those seeking a safe and steady way to invest their wealth, the UK’s buy to let market has always been alluring. But some properties are more difficult to finance than others, as this British investor discovered when he tried to arrange a buy to let mortgage on a mixed-use property.
Mortgaging buy to let property is often more complicated than residential finance – and when the property in question is high in value, as well as unconventional in nature, knowing where to start is very difficult. However, as this case proved, the solution is in knowing the industry well – and having the right relationships to make things happen.
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The client:
Our client in this case was a British national, who worked full time and owned his own residential property. As such, he was not considered a ‘professional landlord’ and this property was not to be his primary source of income.
The property in question – a spacious three bed flat in a fantastic location – was valued at over £1 million. However, it was also a slightly unusual asset, as it was situated above a commercial unit and was near a takeaway. Many lenders are not willing to offer a buy to let mortgage on a mixed-use property such as this, as they can be harder to resell.
As he was well aware of this, the client approached Articus Finance for our expert advice.
The solution:
Applying for a mortgage can be a lengthy and often costly process, once you factor in valuation and application fees. We were therefore keen to tackle this case in the right way, minimising any hassle and reducing the chance of a rejected application.
First, we approached a niche lender that we know to be amenable to offering buy to let mortgages on mixed-use properties. This lender is a building society that has grown significantly over the last few years, meaning it often has an appetite for files of this nature.
As we have an excellent relationship with this lender’s surveyor, we spoke with them beforehand to gain honest insight into what outcome we might achieve. The surveyor was therefore able to do some preliminary research and make an assessment that this building society would, in all likelihood, be happy to provide a mortgage against the property.
While this was by no means a guarantee, it gave us the confidence to make the application and we were delighted to successfully secure a mortgage at 75% loan to value (LTV) on a five-year fixed-term, interest-only basis.
The case in brief:
- Buy to let mortgage on mixed-use property
- British national applicant
- 75% LTV on fixed-term basis
- Interest-only mortgage
