We give your clients the option to roll up some or all of the interest. Any interest which is capitalised is not subject to a stress test, which increases the client's borrowing capacity, particularly on lower yielding assets.
For landlords with low rental yields, whose rental income will not service the loan, our blended products offer a great alternative to top slicing, with the flexibility to maximise borrowing without having to subsidise the loans from personal income.
The roll-up element offers the opportunity for your client to maximise their loan amount, regardless of their rental yield. The serviced element offers a lower rate than the roll-up element. When the two are combined, we aggregate the rates to give one set of loan terms, keeping things simple for you and your client.
Blended rates are available for Buy to Let clients on a Bridge or Term basis, so there’s something to suit every type of landlord.
We worked with a broker to place a limited company application, with three individual applicants, looking to purchase a desirable maisonette in Fulham for £400,000. The clients wanted to borrow £295,000 to buy the property but the rental value was only £1,495 per month, so the yield did not service the full loan amount.
As the clients were experienced landlords, we were able to structure a solution by splitting the balance and enabling the clients to roll up interest on part of the loan and service the interest on the remainder. Because there were no monthly payments due on the roll up element of the loan, this portion was not subject to a stress test, which meant that the serviced loan element met the required stress test. As a result, the clients were able to invest in a sought after property with robust potential for capital gains even though it delivered a low rental yield.