Sometimes a deal can make perfect commercial sense but something seemingly insignificant makes it fall outside a lender’s criteria and the whole thing collapses.
Worse, this can often happen at the last minute when the details are being checked and the borrower is left in the lurch. Brokers know that this is where they earn their stripes – finding a solution when clients are most in need is the reason most brokers are in business.
Vantage was recently referred just such a case: not only was it a purchase of four flats in a block, the purchase was through a limited company and the properties had both a tenancy and sub-lease agreed for two years.
To complicate matters yet further, the company’s directors had no previous experience of buy-to-let – on paper making them a first-time landlord.
The introducing broker had taken their client 90% of the way down the line with one of the high-street lenders but at the last minute, just weeks before completion was due, the deal had been declined due to the complexity of the tenancy agreements in place.
Lucy Hodge, director of Vantage Finance, said: ‘This is a really good example of when specialist advisers can work with brokers to help them get a deal over the line.
‘We took the time to look at the case in detail – the four directors of the company might not have been landlords before but they each earned £60,000 a year through property development.
‘The tenancy agreement in place was with an estate agent for two years – guaranteeing rental income – and they’d agreed a two-year sub-let with the local authority to lease the properties to emergency tenants who weren’t classed as vulnerable.
‘This was the thing that put off the big lender but at Vantage, because we do deals like this day in, day out, when we put the deal to one of our panel of specialist lenders they trust us to present the nuances of a case. They know we are going to give them commercially sound opportunities.
‘As a result, the clients made their completion date and the lender agreed to lend, despite them usually insisting on buy-to-let borrowers having landlord experience.’
Loan amount: £812,052
Rate: 3.90% above Libor, over five years, 1.5% lender fee plus 1% broker fee
Overall LTV: 73.96%