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Town centre apartment – above commercial units

semi/full commercial Feb 08, 2017


I have found a high street property with great fundamentals and a very healthy rental yield.

It is in a very impressive listed (grade 2) building with 10 flats.   On the ground floor are two commercial properties - a Sainsbury’s local and a major bank.

The flat I am looking at is on the third floor of this building with windows facing onto the high street (double glazing in the bedroom).

Should I be concerned about being above commercial in this situation?  Obviously being right in the centre of town provides good fundamentals, but is there likely to be a problem being above these commercial businesses?

My strategy is long term - however I obviously am looking at potential sale in future and don't want to limit my market.


It is impossible not to limit your options on this property. A significant number of BTL lenders will decline to lend on flats above commercial.   This is simply because, as always, they have the end game in mind;...

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One building; three flats

buy to let Jan 31, 2017


I am aiming to buy a freehold BTL property that has three separate flats.   I am unable to find a mortgage provider who will give a mortgage on this type of property.  I was advised that I must have three separate leases in order to get a mortgage.

How can I get a mortgage on this property?


It’s no surprise that you are having trouble finding a lender for this; BTL lenders have a very 'vanilla' approach to what they want to lend on.  This is based on their view of the worst case scenario i.e. how easily could they dispose of it if they had to repossess it?  They look for properties with broad market appeal.  Mostly, if it is not a regular freehold house let on a single AST, they start to put up the barriers.

These ‘unmarketable’ properties include:

  • Non-standard construction
  • Flats above commercial units
  • Flats in high rise blocks
  • Properties let by the room and many other quirky features
  • Houses divided...
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Time to remortgage


The lender I’m with has revised their lending criteria to exclude the mortgage I have had with them and I’ve reached the end of term and need to remortgage.

The property is a studio flat with 63 years lease remaining, value £65k with 40k outstanding, but it is less than 30sq m.

What do you recommend?


You have two problems..

  • A small space
  • A short lease (at least in mortgage terms)

The majority of lenders set 30sq m as their minimum space threshold based on their belief that the marketability diminishes significantly below that figure i.e. it is so small it turns off potential buyers.  However, there is not much you can do to increase its size.

Lenders get very jittery about short leases (anything less than 75 years), also due to the reduced marketability.  In a stagnant market, the flat will decline in value as each year ticks down until the lease expires.  Typically they can require anything from 25 to 45 years...

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Starting your property investment the smart way

bridging finance Jan 15, 2017


I am pretty new to this, I have found a few BMV properties, one is a 3-bed semi property that will sell for maybe £65k, needs a full refurb, market value on the street is approximately £145k.  I don’t have much in the way of funds to put into this, what would the best option be?


The generic answer to your question would be delayed completion bridging, as long as the house was vacant.  This enables you to borrow against the £145k post refurb value, not the £65k purchase price to complete the purchase,

Here's how it works:

  1. Negotiate with the vendor to exchange contracts quickly, so they are reassured that it is sold.
  2. That negotiation should include getting the keys on exchange, not on completion as is normal, so you get access to the property.
  3. That negotiation must also include delaying the completion until the refurb is complete.
  4. Get agreement to lend from a bridger that will lend on the post refurb price, whilst...
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Get your money out fast ...

buy to let Jan 05, 2017


Do you know any lenders who are willing to lend straight away? I’ve been trying to purchase a second property and they all say I have to wait six months before I can take out a BTL mortgage.


If you have bought a property for cash and are now seeking a mortgage to recycle your cash into your next deal, almost every BTL lender will impose a 6 month ownership restriction before they will accept an application for a remortgage.

You may wonder why; it’s because they have an objective which is diametrically opposed to yours.  You want to get your cash out, they want you to keep it in, as they see you taking your cash out as a threat to the security of their money sitting in your property.

If you want access to the full range of BTL mortgages and the low rates that they offer, you have to wait 6 months and there is no other way to achieve access to them.

A very limited number of BTL lenders will accept remortgage applications within the first 6...

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Get your money out fast ...

buy to let Dec 29, 2016


How can I purchase a property, refurb and refinance to extract most of my money WITHIN 6 months please? I can buy cash if that helps to start with.


Almost every BTL lender uses a 6 month ownership restriction specifically designed to stop you from doing what you want to do, as they view it as increasing their security risk. They feel safe when they have your cash, or at least 25% of it, invested in the property.

There are a very limited number of BTL lenders that allow you to apply within 6 months of purchase, but their lending is based on the purchase price.

One or two may allow extra borrowing on the money you can prove you spent on the refurb, rarely on the new market value you have created. So, if you are lucky, you might get a mortgage of 75% of purchase price plus 75% of refurb costs. Hardly getting most of your money out.

If you can buy cash you should do, as you will have zero borrowing costs, until you refinance.  The other advantage of buying...

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What qualifies a property as an HMO?

HMOs are a typical point where a clash of opinions occurs.

HMOs get valued as commercial properties, but HMOs converted from what was an ordinary residential property, rather than a commercial to residential conversion such as a pub or offices are NOT a commercial property, but a residential property temporarily being used for a commercial purpose.

These are the main differences between actual commercial properties and residential properties converted to HMO.

Commercial HMO
  • Leases are long, up to 20 years
  • Leases are rarely longer than 12 month ASTs
  • Lenders take comfort from the lease providing an increased likelihood that the loan will continue to be serviced
  • Sometimes licenses are used, rather than a lease


  • Leases are often fully repairing, meaning the tenant is responsible for the upkeep
  • ASTs give lenders less comfort in continued serviceability of the loan
  • Leases have built in break clauses and rent reviews
  • The landlord is always...
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Will a poor credit rating limit your investment potential?

buy to let Dec 19, 2016


I'm currently looking at purchasing a house for £70k and I have funds to purchase outright with no mortgage. I have a potential tenant ready to rent at £550 pcm returning approximately 9%

My credit rating means I can't place a deposit and get a buy-to-let mortgage, hence buying outright. I’d like to take £60k out of the £70k paid back out for future investments.

Would the banks look at me completely different having a £70k asset or will they still view me as a poor risk and refuse to lend?


If I understand you correctly, you have previously been declined for a BTL mortgage because of your poor credit history. If that is correct, owing an unencumbered property will make absolutely no difference to that. Your credit history doesn’t change because you buy a property for cash.

Mortgage lenders turn down people with poor credit histories because that history identifies them as someone who has proved less able to maintain...

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How to improve the surveyor's valuation


I’m looking to refinance a property as soon as possible to release cash tied up.

Similar properties on the same street sell for £95k and I purchased mine at £75k and spent about £5-6k on the refurbishment (painting throughout, new carpets, new kitchen units, new electrical wiring, new toilet and basin).

However, I’ve just heard no one took the requested before photos so I’ve got no photographic proof of what it looked like pre-refurb (and I can’t show off the refurb either!)

Will this present a problem if I try to re-value the property to a higher amount?


It helps to understand the mindset of the surveyor who will be visiting your property and that will be very much to value any recently bought property at the purchase price paid, unless given compelling reasons not to.

Such as:

  • Planning permission gained
  • Structural alterations that increase the footprint i.e. an extension
  • A cosmetic internal refurb

The degree...

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BTL or Commercial Mortgage?


I'm looking at a HMO for my next project but would like to put this one into a new limited company. How easy\difficult is to get a mortgage on a limited company without any trading history

What are the perils and pitfalls of using brand new limited companies for lending? Is it possible?


Mainstream BTL lenders do not lend to limited companies or SPVs regardless of how young or old they are. If you want a 'vanilla' BTL mortgage you have to apply as an individual.

If you want to borrow in the name of a limited company, then you will need to go to commercial lenders, or what I would refer to as specialist lenders; those on the periphery of BTL lending.

Trading history, accounts etc. are less relevant if the property you are putting up as security has a provable, consistent income that reassures the lender that you have the ability to service the mortgage payments. So, if you can show a fully let property, with ASTs as the proof of...

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