How we helped one of our 71-year-old portfolio landlords remortgage 8 of his properties and avoid being forced to sell any of them
So the new portfolio landlord changes hit the mortgage market last month and I wanted to share a way we managed to help a client across his portfolio re-finance. Our client had 8 properties that had completely finished term, in a portfolio of 11. There was a few issues on top of this clients situation such as the fact he is 71 as well as the portfolio being in London so the yields are not too great against the values. On top of this some of the properties were owned in structures which a lot of lenders are not favourable of, such as freeholder being son and leaseholder being parent. There was numerous obstacles to look at across the board. The plan over the next 5 years was to eventually start selling them and clearing the debt until there was only unencumbered properties remaining.
As the client had let the term expires without speaking to the existing lender they initially wanted to switch the whole portfolio to repayment causing a huge increase in monthly repayments. We then negotiated with the lender and had a discussion if we take half of the portfolio away to de-risk them as a lender, would they be open to term extensions on the remaining properties which they agreed to. We then managed to remortgage 4 of the buy to let properties away to new lenders savings the client 1% per annum across £1,200,000 worth of debt (£12,000 per year). These were put in to 2 year products so the client had flexibility of selling them as his plan, or paying them down so he is left with them unencumbered.
Once they had completed we then spoke with the existing lender and filled out a budget planner, also including the new tax changes and calculations of how the clients tax bill will now be increasing. This budget planner made it clear the client was not in a position to switch the mortgages on to repayment. On this the lender has agreed a 10 year term extension for the remaining £1,400,000 of the debt and allowed us to do a rate switch to fall in line with their latest products saving another 0.35% for the client on the remaining debt (4,900 per year). So overall the client had managed to save £16,900 per year in interest which is ideal to assist with the new buy to let ta changes, extend the term of the whole portfolio so he was not forced to sell and reduced prices and was given the cash flow freedom he needed until he was in a position to sell and pay down the debts.
It is more important than ever for portfolio landlords to get advice right now as changes are happening weekly in the buy to let market. If you currently have a portfolio of properties and haven't had any advice over the last couple of years I would advise to get in to contact with a broker as soon as possible.
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