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Bringing Properties in the North and South Under One Mortgage to Finance a Purchase

by | Apr 26, 2022 | Case Study

Loan type: commercial investment mortgage

An investor wanted to buy 12 properties in Burnley, Lancashire. In their existing portfolio, they owned two single buy-to-let London properties with a total value of £910,000 (£460,000 + £450,000). The existing rent on the two properties totalled £33,300 yearly (£1,400 per month + £1,375 per month respectively). This equates to a relatively low rental yield of 3.6%. Both properties were already mortgaged, with a total mortgage value of £512,300 (£263,500 + £248,800). The investor had about £400,000 equity within the two properties. The 12 prospective Burnley properties were worth £580,000 as a portfolio and produced a total rental income of £54,300 yearly, equivalent to a rental yield of 9.3% – a much higher yield than the London properties.

To fund the purchase, CPC Finance helped the investor obtain a single mortgage across all 14 properties: the two London properties, and the 12 Burnley properties. We were able to combine the equity built up within the two properties in the South with the rental income from the Northern properties, resulting in a mix in the portfolio and the best of both worlds.

Combining the 14 properties, we had a total asset value of £1,490,000 and a total asset rent of £87,660 (equating to an overall yield of 5.8%). This enabled us to secure a single commercial investment mortgage worth £1,096,875. The mortgage had a 4.25% interest rate and an arrangement fee of 1.25%. This kind of mortgage is typically available with an interest-only facility for up to a 20-year term, with three, five, or 10 year fixed rate. This new mortgage repaid the existing mortgage on the two London properties and paid for the purchase of the Burnley properties with no cash deposit required.

See our blog for the full case study.

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