We were approached by a broker whose clients were a married couple looking to re-configure their property portfolio on the advice of their accountant.
The couple, who currently own 50 rental properties had been advised to begin selling their low-performing properties and transfer ownership of their remaining ones to that of an SPV Ltd Co.
In reality this type of transaction is not a straight ‘transfer’ – the couple must in fact sell their properties to their SPV limited company at open market value.
The first property the couple had decided to sell to their SPV is a two-bed ex-council flat within a small block in Manchester.
Several factors meant the finance required would need to come from a specialist lender.
The broker approached Keystone Property Finance – as they doesn’t impose any age restrictions on those borrowing via a limited company. Deeming the couple a good risk, the following terms were offered:
Property value: £115,000
Loan amount: £86,250
Rate: 3.89% 5 year fixed
Product: Classic Range
RTI: 125% @ 3.89%
Term: 25 years interest only
Borrower: SPV Ltd Co
Lender arrangement fee: 2% (£518)
Mortgage payment: £279 pcm
Rental income: £575 pcm
Gross yield: 6% pa
Proc fee: 0.6% (£517)