Finding appropriate Lender for a multi let property?

Finding appropriate Lender for a multi let property?

11:04 AM, 23rd February 2023, About A year ago 7

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Hello, I would be interested to know whether anyone has had similar problems as me in finding an appropriate lender in order to release funds on my multi let property.

I recently re-developed my original residential home from a three bedroomed house to two one-bedroomed flats, after a long time and considerable expense the project was finished and I started to let out the property last year. I am in the fortunate position that there is currently no mortgage or borrowings on the property. However, there is considerable value tied up in the property which I was hoping to release as a part of my strategy of expanding my portfolio.

In looking at releasing funds against the property I have come up against a number of negative comments from brokers, namely centred around fact that whilst the deeds of the property are as a house, I have two flats in said property so they deem it to be multi let or HMO.

One broker who I shall not name tried to advise that I needed to mortgage each flat?

This, as I explained I would not do, as effectively it would mean me paying twice the fees and would not in my opinion be cost effective.

Whilst I accept the premise that I have a multi let property, this I assume is not a rare state of affairs. However it seems to be causing me enormous problems.

I would welcome any comments surrounding this issue.

Thank you,

Philip


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Comments

Gary Wilson

11:46 AM, 23rd February 2023, About A year ago

I had the same problem. I placed the freehold into a newly created company and created a lease for each property. As a leasehold, you will get a mortgage on either property with no problem. See a solicitor.

Fen Jen

11:55 AM, 23rd February 2023, About A year ago

Try Mortgages for Business as the broker and Kent Reliance for the mortgage.

David

12:03 PM, 23rd February 2023, About A year ago

The NRLA have a mortgage broker they recommend who I assume has more experience of let property.

Malcolm Jones

12:03 PM, 23rd February 2023, About A year ago

Hi Philip
Based on the circumstances described, I cannot foresee any issue with arranging one mortgage over this property type. Lenders will indeed classify the property as Multi Unit, but as it will be a single mortgage over the entire building, only one valuation & legal fee would apply.

We have arranged mortgages for a number of similar properties.

Please feel free to contact us on 03455 488002 to discuss further.

Brooklands Commercial Finance Ltd

David Morgan

10:50 AM, 24th February 2023, About A year ago

Reply to the comment left by Gary Wilson at 23/02/2023 - 11:46
Try http://www.morganfinace.co.uk
If they can't then you are going to struggle. Hope this helps

David Morgan

10:50 AM, 24th February 2023, About A year ago

Reply to the comment left by Gary Wilson at 23/02/2023 - 11:46
Try http://www.morganfinace.co.uk
If they can't then you are going to struggle. Hope this helps

AP

7:37 AM, 25th February 2023, About A year ago

There are several lenders that will lend on a Multi Unit Freehold Block (MUFB).
I would do some research yourself as well as speaking to a broker (I’ve found through the years that brokers actually mess up more than I do on applications!)

But you may actually get better rates from more mainstream BTL lenders if you create leases for each flat (with the freehold held in a LTD company or spouse’s name) and get individual mortgages on each.

I own two MUFB and have created leases for them and accessed better rates. Some lenders will not lend until the leases have been in place for 6 months. And some lenders have rules about the % of a block you can own to limit their exposure (it’s meant to really be there to protect for bigger new builds but can inadvertently catch you out).

Following the rise in rates, just compare the rates available including all lending fees and the cost of the new lease creation.

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