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.
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 and so the numbers did not stack up.
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.