The Client
The clients are UK portfolio landlords who already own multiple investment properties in Northeast England, as well as their own residential property. They were in the process of purchasing a leasehold block of eight flats on one title for £215,000, via their SPV limited company. Both applicants are self-employed, with the main applicant working as a builder.
The Scenario
The clients had sufficient funds from a recent buy-refurbish-refinance project and planned to carry out minor works to the block to increase both value and rental yield. They had an existing mortgage application underway through another broker, until the chosen lender pulled the application because of the level of personal borrowing the clients had accrued while carrying out ongoing refurbishment projects over the previous six months. We knew they needed to act fast to avoid losing the property.
The Solution
Given our experience with specialist property types such as multi-unit blocks of flats, and as a whole-of-market bridging loan broker, we knew there were lenders who would consider the case with a satisfactory explanation for the level of personal credit involved.
As the clients wanted to carry out some works and needed as high a loan-to-value as possible, we recommended an 85% LTV bridging loan. This allowed them to purchase the property, carry out the works, and have the security of knowing they could refinance onto a long-term mortgage with the same lender once the works were complete.
As existing borrowers with this lender, the clients received a 0.25% discount on the arrangement fee. After carrying out a two-month refurbishment project at a cost of £22,000, they are now in the final stages of securing their long-term buy-to-let mortgage with the same lender, at 75% of the new £320,000 value.
Summary
When purchasing buy-to-let or investment properties through a limited company, lenders will still look closely at personal borrowing. It is worth being mindful that your broker has checked whether lenders apply a background debt-to-income assessment for the directors involved.
Bridging products are available up to 85% LTV, giving the flexibility to carry out refurbishment projects without needing as large a deposit, while still completing at speed.
Frequently Asked Questions
Do lenders check personal borrowing when lending to a limited company?
Yes, lenders will typically assess the personal borrowing of the directors, even when the application is made through a limited company.
Having a clear, satisfactory explanation for higher personal credit levels can make a real difference to whether a lender will proceed.
What happens if a mortgage lender pulls out partway through an application?
It is possible to move quickly to an alternative lender or product, such as a bridging loan, to avoid losing the property.
Acting fast and understanding exactly why the original lender withdrew both matter considerably when sourcing an alternative.
Can I get a discount on a bridging loan if I have borrowed from the lender before?
Some lenders offer a discount on arrangement fees for existing borrowers.
This is worth checking for, particularly if you already have a relationship with a lender who is a good fit for your case.
Can I refinance a bridging loan with the same lender once works are complete?
Yes, many bridging lenders also offer long-term mortgage products, making refinancing with the same lender a straightforward option.
This can simplify the process considerably compared with sourcing a completely new lender for the exit.
Commercial Finance Network is a whole-of-market FCA authorised commercial finance broker working with property investors, developers, and businesses across the UK and internationally. We work across the full specialist bridging and buy-to-let panel and will tell you which lenders will engage with your deal, what LTV and rate to expect, and how to structure the application before anything is submitted.
Commercial Finance Network is directly authorised and regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured against it. Buy-to-let and business-purpose lending secured against investment property is not regulated by the Financial Conduct Authority.
Call us on +44 1494 622 111 or email info@cfnuk.com to speak to a specialist directly.
Related Pages
- Bridging Loans – fast, flexible funding secured against property
- Buy-to-Let Mortgages – whole-of-market advice for landlords across the UK
- Advanced Buy-to-Let Portfolio Structuring – strategic financing for growing property portfolios
- Bridging Loan Calculator – estimate monthly interest and total borrowing costs