The Scenario: A Strategic Acquisition
A property investor approached us with an ambitious plan: to purchase a substantial block of 46 residential flats, with a total property value of £11.2 million. His strategy was ownership within a limited company, allowing for asset ring-fencing.
The investor was not relying on personal capital for the deposit. Instead, he intended to use investor finance to cover this portion, while seeking a 75% loan-to-value (LTV) commercial mortgage to complete the purchase. The mortgage needed to be interest-only over a 25-year term, enabling lower monthly repayments and maximising surplus income from the rental yield.
This was not a standard buy-to-let transaction; it was a complex, layered investment structure requiring careful planning, lender engagement, and underwriting expertise.
The Challenge: High Leverage, Company Structure, and Investor Involvement
This case presented several key challenges that required expert handling:
Complex Ownership Structure
The 46 flats were to be owned via a limited company. Structuring the loan to satisfy legal, underwriting, and regulatory requirements was essential.
Investor-Funded Deposit
The primary applicant was not contributing his own funds for the deposit. Instead, outside investors were providing capital with the expectation of returns over time. This non-traditional income and deposit source raised red flags for some lenders.
High Loan-to-Value Requirement
The client sought a 75% LTV commercial mortgage, reducing the need for a large deposit but making the deal riskier in the eyes of many underwriters.
Long-Term Interest-Only Structure
To make the investment cash-flow positive from day one, the client needed an interest-only mortgage over 25 years—another feature that can limit lender appetite.
Goal Alignment
Ultimately, the investor’s goal was to use the rental income from the flats to pay back the external investors over the next decade, after which he would fully own the properties, turning the asset into a long-term pension strategy.
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The Process: Strategic Positioning and Targeted Lender Engagement
The first step was to present the structure to potential lenders in a way that demonstrated both the commercial viability and long-term sustainability of the investment.
Lender Matching
We shortlisted commercial lenders with experience in funding complex multi-unit residential blocks. These lenders were known for being open to layered ownership and for accommodating bespoke borrowing structures.
Underwriting Support
With a detailed breakdown of the ownership structure, investment partners, and projected rental income, we presented a comprehensive underwriting pack. This included forecasts of surplus rental income, investor repayment plans, and long-term property appreciation models.
Mitigating Risk
We addressed the perceived risks by positioning the deal as a stable, cash-flow-generating asset. The strong rental market and the quality of the flats made a compelling case for consistent income and capital security.
The Solution: A Tailored Commercial Mortgage Structure
After extensive discussions and thorough due diligence, we secured a commercial mortgage totalling £8.4 million, which represented 75% of the total purchase price. The funding was provided within a limited company, structured legally and financially to satisfy both lender and investor needs.
Key Terms:
- Loan Amount: £8,400,000
- Loan-to-Value: 75%
- Term: 25 years
- Repayment Type: Interest-only
- Ownership: Limited Company
- Deposit Source: External investors (fully disclosed and approved by the lender)
Why the Solution Worked for the Client
This solution worked seamlessly for the client for several reasons:
- Deposit Flexibility: He was able to leverage investor finance for the deposit without sacrificing control or ownership of the asset.
- Cash Flow Positive: The interest-only structure and strong rental income meant the properties were cash-flow positive from day one.
- Long-Term Planning: With the ability to pay back his investors over the next 10 years using rental surpluses, he retains the opportunity to own the entire portfolio mortgage-free in the future, creating a powerful pension strategy.
By structuring the purchase through a limited company, he also benefited from limited liability protection, flexible tax planning, and future resale or inheritance options.
Outcome: Long-Term Security Through Smart Finance
This deal allowed the client to secure a significant commercial mortgage, purchase a high-value portfolio of 46 residential flats, and structure the investment to benefit both his backers and his long-term wealth plans.
Thanks to our deep understanding of the commercial mortgage market and our ability to work with specialist lenders, the investor walked away with:
- A £8.4 million commercial mortgage on favourable terms
- A cash-generative asset capable of repaying investor finance within 10 years
- A clear route to full property ownership, forming the backbone of his retirement planning
Looking Ahead: Strategic Property Investment Made Possible
This case showcases how tailored commercial mortgage solutions can unlock large-scale property acquisitions, even when traditional lending criteria fall short. Whether it’s complex ownership structures, non-traditional deposit sources, or long-term interest-only loans, we work to build bespoke funding packages that align with your financial goals.
If you’re considering a large residential or commercial property investment and require a partner who understands how to structure complex deals, we’re here to help.
Contact our team today to discuss how we can support you.
