The Scenario
A portfolio landlord was seeking to remortgage one of their buy-to-let properties to raise capital for home improvements. The property, a two-bedroom flat in London, was valued at £650,000 with an outstanding loan amount of £392,000 from the current lender, Barclays. The client wanted to secure a new mortgage with a higher loan amount to cover the planned improvements while maintaining manageable monthly payments.
The client preferred a five-year fixed-rate mortgage to ensure stability and predictability in their payments. They also required a 25-year loan term to align with their budget and cash flow preferences. This remortgage was a critical step in optimising their property portfolio and achieving their financial goals.
The Challenge
This case presented several challenges:
- Affordability Requirements: The client’s preference for a maximum lending amount required a lender that could accommodate the desired loan-to-value (LTV) ratio and affordability calculations.
- Capital Raising for Improvements: The new lender needed to allow capital raising for the specific purpose of home improvements while ensuring the property met lending criteria.
- Fixed-Rate Product Availability: The client’s preference for a five-year fixed-rate product required sourcing a competitive rate not readily available through standard systems.
- Property Type: As a flat, the property’s type and characteristics had to align with the lender’s acceptance criteria.
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The Process
After a detailed review of the client’s financial situation and goals, a tailored strategy was developed:
- Selecting the Right Lender: West One was identified as the ideal lender due to their flexibility in allowing capital raising for home improvements and their favourable criteria for flat properties in London.
- Securing the Right Product: While the desired product was not available through standard sourcing systems, the details were manually added to the application.
- Structuring the Loan: An interest-only mortgage of £422,500 was recommended to keep monthly payments in line with the client’s budget while maximising borrowing capacity. The 25-year term ensured long-term affordability and cash flow stability.
- Discussing Protection Needs: Protection options were discussed with the client, who chose to revisit these closer to the completion date, ensuring their immediate focus remained on the remortgage process.
The Solution
The recommended solution was a buy-to-let remortgage with West One, featuring:
- Loan Amount: £422,500, providing sufficient funds for home improvements.
- Interest Rate: A competitive fixed rate for five years, delivering payment stability and predictability.
- Term Length: 25 years on an interest-only basis, aligning with the client’s financial preferences and property investment strategy.
- Lender Fit: West One’s criteria accommodated the property type and the client’s affordability profile, ensuring a seamless approval process.
Outcome
The remortgage successfully concluded, allowing the client to access the required capital for home improvements while maintaining manageable monthly payments. The five-year fixed rate provided peace of mind against potential interest rate fluctuations, and the interest-only structure supported cash flow efficiency. This solution enhanced the client’s ability to invest in their property and optimise their portfolio for future growth.
Key Takeaways
This case underscores the importance of customised mortgage solutions for property investors. By identifying a lender with flexible criteria and competitive products, we delivered a remortgage solution that met the client’s goals.
If you’re a landlord looking to remortgage or capital raise for your property investments, contact us today to explore tailored options that align with your objectives.
