01 November 2022

Divorce doesn’t mean you have to lose your investment

By West One

We look at how West One were able to assist a self-employed client who was looking to purchase back a property and convert it into 5 multi-unit freehold block (MUFB) property from their ex-wife which was acquired as part of a divorce settlement. 

The Client

West one was approached by a self-employed individual who is a company director. The individual owns residential property in the UK valued at £525,000 which is mortgage free, they have clean credit, with no adverse credit risk. They are an experienced landlord with a portfolio of five BTL properties worth circa £1.7 million.

The Challenge

Self-employed status often brings challenges for these individuals as they attempt to secure funding. The criteria set by many high-street lenders can further complicate the process and often adds layers of ineligibility for complex cases when those individuals classed as self-employed are involved. This is where self-employed borrowers can turn to specialist finance companies that can add value and approach the case on its own merits.

On this occasion, the applicant wished to purchase a property and convert it into 5 MUFBs. The property was in possession of their ex-wife who acquired it as part of a divorce settlement. However, she was looking to sell, with our applicant looking to purchase the property back from her with a source of funds coming from a directors loan from the business. The intention of the purchase is to retain the properties and receive a rental income for the long-term. 

The Situation

The property consists of five MUFBs, four separate flats being purchased with leases being created on completion, and the fifth flat on freehold which is being purchased outright by the applicant who is looking to retain the freehold. What makes this situation a challenge is that it is a limited company purchase. The landlord already owns five properties and will go on to own ten properties at the end of the transaction resulting in the overall exposure on the property by one lender sitting at 80%. Just one of these factors could lead to traditional lenders rejecting the opportunity to work with the client.

If we consider just one of these factors as an example, it is common for landlords to encounter difficulties when creating a portfolio of BTL when four or more properties are owned. We often see high-street lenders become reluctant to lend to ‘professional’ landlords. West One has products in place to lend on any additional properties to the individual with no limit on number of units owned.

The exposure on a block can cause further issues which complicates matters for some lenders. As the client owns the whole property, they may look to sell part of the block and retain the remainder. West One can help here by looking to lend against the freehold and value of the remaining block, with the leased units sold on.

Our solution

The applicant is buying a five-unit MUFB for £650,000, with a loan of over £350,000. On the surface, a simple transaction, but the intricacy involved because the individual is self-employed, a ‘professional’ landlord and overall exposure on the block by one lender. These challenges on an individual basis can prove problematic, however specialist lenders like West One who work with applicants, and judge cases on their merits are able to work through challenges and provide a solution.

West One specialise in creating integrated lending solutions across the property investment lifecycle taking complex buy-to-let cases and using our expertise and experience in the market to provide solutions.

Explore West One buy-to-let here https://www.westoneloans.co.uk/buy-to-let-mortgages 

Find out more about West One’s fast, flexible finance solutions here. Discuss a case or find out more about large bridging loans by contacting the West One sales team now on 0333 123 4556 or btlbrokersupport@westoneloans.co.uk

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