Helping a landlord with tenants in situ cover an existing charge

Loan Amount:
£150,000

Property Value:
£200,000

LTV:
75%

We supported a landlord who required funding to repay a separate facility that was coming to an end. As the capital wasn’t going to be used for a property purchase, we had to explore the client’s existing assets and resources to support the loan.

We also had to place additional emphasis on the potential exit strategies available to make sure the loan would be covered effectively.

Our underwriter got to work. From the outset, they reached out to the borrower’s accountant to make sure the deal sat on solid financial plans.

Taking precautions even with a solid deal

We saw the borrower had built up their wealth from several sources. What’s more, they had stable sources of income. They also had a clear credit record, showing there shouldn’t have been issues with the repayments.

The property being used for security was also in good condition, following a recent refurbishment. There were also sitting tenants, bringing in monthly income for the owner. The client was also very experienced in the property world, which gave us even more confidence.

While there were many positives to this deal, we still took a cautious approach to ensure the deal would work. We worked closely with the valuer involved, while also requesting relevant documentation covering how our funds would be used.

Given the borrower’s strong credentials, along with having multiple exit strategies available, we issued the loan.

Sitting tenants can present pros and cons

Progressing with a property investment plan can be tricky with sitting tenants involved. Also known as having tenants in situ, they can potentially devalue a property by as much as 30-40%.

What’s more, people can often find themselves becoming accidental landlords who may struggle with their new responsibilities and obligations.

But, with over 16 years of specialist lending experience behind us, we’ve built up vast swathes of knowledge on the buy-to-let market. We understand the ins-and-outs of the landlord scene, and all the challenges that can present themselves.

We’ll know how to adapt to your situation, and take into account all the complications. If you want to expand your buy-to-let portfolio, with or without sitting tenants, we’re here for you.