Lenders are still lending: releasing £100K equity on remortgage of BTL to be ready to purchase

The Scenario

Our client approached us to talk about remortgaging a 3-bed BTL in Slough as it was approaching the end of its fixed-rate term.

He had a current mortgage of £180,000 on the property, which was now valued at £375,000. He was looking to take out as much equity as possible, to purchase another rental property. But he didn't know how much he'd be able to raise because lenders apply different stress tests to rental income.

The Solution

Interest rates were super-low. Even as lenders were talking about putting a freeze on site visits for valuations, we sourced a lender who would offer 75% LTV, and we were confident this application would qualify for their online Automated Valuation Model (AVM) valuation, so he wouldn't have to wait for in-person site visits to resume. 

We recommended a five-year fixed term at an annual rate of just of 2%, which increased the equity release from £40,000 to £100,000. Which gives our client sufficient funds to look at buying two further investment properties, rather than one, to meet what he's predicting will be an increased demand for rental accommodation in an uncertain property market. 

Read our blog: Online property valuations during Covid 19 business conditions