Our client was a Cypriot National who owned several investment properties in London. Two of his properties were on variable rate mortgages that were gradually increasing in cost due to the continual base rate increases from the Bank of England. He approached us to see if we could secure more competitive pricing as well as extend the terms for the foreseeable future.
We secured finance on both properties through the international division of a high street building society. The society was able to offer rates comparable to the UK BTL market at point of application. Additionally, there were no lender or legal fees payable which is almost unheard of for this type of deal. The overall solution was considerably cheaper than any other deal in the marketplace.
This was not the quickest deal to arrange due to the client’s offshore status. Lenders typically tread carefully when it comes to applicants overseas for a variety of reasons. The risk of fluctuating exchange rates or the potentially complex structure of the applicant’s income can increase the risk in the eyes of the banks. Furthermore, lenders may blacklist certain countries due to money laundering and corruption concerns.
As a result, international lenders will often demand a rigorous amount of documentation from the applicant which can take longer to compile due to differences in time zone. The end result is often a long and arduous underwriting process that can leave all parties frustrated which ultimately, can put the deal in jeopardy.
Key to securing an offer for the client was a hands-on approach to the gathering and processing of information requested by the lender. The lender required a substantial number of documents from the applicant, with several of these having to be translated in a timely manner.
Additionally, high stress tests reduced the amount that could be borrowed on one of the properties thus leaving a borrowing shortfall. However, we were able to negotiate with the lender to consider both properties under one “like for like” buy to let application.
This meant that although we were technically raising capital on the second property to pay down the shortfall on the first, the lender was able to group them together as a single “like for like” application meaning we avoided further, higher stress tests.
Once we had overcome the issues above the lender was happy to make an offer for both properties.
We secured a margin above base for 3 years while also extending the overall term to 25 years thus securing the properties for the long term.
This gave the client peace of mind knowing that his UK investments were tied down for the foreseeable and he is delighted with the outcome.
We will look to secure competitive fixed rate terms once rates have reduced further, potentially within the next 18 months.
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