Refinancing a larger portfolio
Discussion
My friend has a 100+ portfolio of rental properties. His loan facility with a major bank runs out next year. He really doesn't want to renew with the current lender. Any suggestions on who best to go to for a new arrangement? LTV is about 35%. Term required is 15 years on repayment basis. Fixed rate around 5% ideally. No objection to recommendations to FAs who can handle the deal on a fee basis.
drainbrain said:
My friend has a 100+ portfolio of rental properties. His loan facility with a major bank runs out next year. He really doesn't want to renew with the current lender. Any suggestions on who best to go to for a new arrangement? LTV is about 35%. Term required is 15 years on repayment basis. Fixed rate around 5% ideally. No objection to recommendations to FAs who can handle the deal on a fee basis.
What's the location, and do you know who his current lender is?Any of the main UK property funders would be interested in this. natWest and Lloyds would certainly do this and would be the most price competitive. Depends on the level of income generated by the portfolio, location, condition of properties etc but I think this would be pretty straightforward for him to refinance this. He would need new prof valuations though I suspect...
drainbrain said:
My friend has a 100+ portfolio of rental properties. His loan facility with a major bank runs out next year. He really doesn't want to renew with the current lender. Any suggestions on who best to go to for a new arrangement? LTV is about 35%. Term required is 15 years on repayment basis. Fixed rate around 5% ideally. No objection to recommendations to FAs who can handle the deal on a fee basis.
Assume 100 properties at £100,000 each - that's a £3.5million loan on a £10 million portfolio.Why one earth would he want to "fix" at nearly double the cost of current mortgage rates? He'll be paying about £80,000 p.a. more interest than he needs to. His rental income will rise with inflation anyway.
None of this makes any sense at all. None whatsoever.
Babber1 said:
Any of the main UK property funders would be interested in this. natWest and Lloyds would certainly do this and would be the most price competitive. Depends on the level of income generated by the portfolio, location, condition of properties etc but I think this would be pretty straightforward for him to refinance this. He would need new prof valuations though I suspect...
Oddly enough it's not that straightforward although I don't think it'll be that difficult either once in the right hands. Certainly any lender will require valuations, and one of the worst parts is that security has to be taken over every unit individually (I think). So along with drawdown fee (and quite possibly FA's fee too) there's probably a six figure cost involved, which isn't the happiest prospect.Ozzie Osmond said:
Why one earth would he want to "fix" at nearly double the cost of current mortgage rates? He'll be paying about £80,000 p.a. more interest than he needs to. His rental income will rise with inflation anyway.
Would it be safe to assume that you don't know or know of a lender who'd be prepared to lend my friend longterm fixed money at current (residential?) mortgage rates? Because if you do, it would be of great interest, not to mention be worth a 'very good drink' to you to make the connection. Out of interest if it exists at all what is the longterm fixed residential rate these days?
Can't speak for "fixed" but there are IMO some absolute bargains in the "floating" category around 2%!
For rudimentary guidance have a look at this link for both fixed and floating rates,
http://moneyfacts.co.uk/mortgages/best-mortgage-de...
For rudimentary guidance have a look at this link for both fixed and floating rates,
http://moneyfacts.co.uk/mortgages/best-mortgage-de...
Ozzie Osmond said:
Can't speak for "fixed" but there are IMO some absolute bargains in the "floating" category around 2%!
For rudimentary guidance have a look at this link for both fixed and floating rates,
http://moneyfacts.co.uk/mortgages/best-mortgage-de...
What's the relevance of BTL rates, the OP's mate will be taking a commercial loan.For rudimentary guidance have a look at this link for both fixed and floating rates,
http://moneyfacts.co.uk/mortgages/best-mortgage-de...
The best way would be to employ a Commercial Finance Broker - they trawl the banks for the best deal, apply pressure on valuers to keep costs down and values up. I can recommend someone if needed via PM.
If not then a trawl of all the banks by your mate - put a business plan together with all the relevant information and let them come to your mate with a proposal. All the major banks all falling over themselves to lend on property again - RBS, Santander, HSBC, Lloyds etc all keen to lend. Also consider the likes of Aldermore or Handlesbanken.
GT03ROB said:
I would think drainbrains mate has the problem that it's a substantial portfolio. The normal BTL or residential mortgage rates will not normally apply to a portfolio of 100 plus properties. A lot of BTL mortgages are limited to the number of properties that can be in the portfolio.
Correct. Next level of problem is the 'lending by formula' one which provides almost endless difficulties for large portfolio financing. There's always some criterion that creates a stumbling block. But a London based IFA firm has (today) agreed to take the case and provide a bespoke solution. JQ said:
What's the relevance of BTL rates, the OP's mate will be taking a commercial loan.
The best way would be to employ a Commercial Finance Broker - they trawl the banks for the best deal, apply pressure on valuers to keep costs down and values up. I can recommend someone if needed via PM.
If not then a trawl of all the banks by your mate - put a business plan together with all the relevant information and let them come to your mate with a proposal. All the major banks all falling over themselves to lend on property again - RBS, Santander, HSBC, Lloyds etc all keen to lend. Also consider the likes of Aldermore or Handlesbanken.
Thanks. PM will be sent. Contact was made today with a CFB but another one certainly won't hurt. The costs of moving portfolios are eyewatering and the normal CFB fees don't add much to it relatively speaking whilst, as you say, providing costsaving negotiations with valuers/lawyers etc which can make a skilled CFB very worthwhile to engage. The best way would be to employ a Commercial Finance Broker - they trawl the banks for the best deal, apply pressure on valuers to keep costs down and values up. I can recommend someone if needed via PM.
If not then a trawl of all the banks by your mate - put a business plan together with all the relevant information and let them come to your mate with a proposal. All the major banks all falling over themselves to lend on property again - RBS, Santander, HSBC, Lloyds etc all keen to lend. Also consider the likes of Aldermore or Handlesbanken.
Also, as you say, normal BTL rates are irrelevant and of course it'll be a comm.loan anyway. But I'd be interested in what current fixed-for-a-lifetime rates are on either BTL or resi. I think current 10 year are hovering just under 4%. Don't know if 15 or lifetime-of-loan even exist. But if they do, I'd be surprised if they were much under 5.
drainbrain said:
normal rates are irrelevant
Absolutely not. When you see rates of 2% being publicly advertised that should be your target! It makes no sense to just roll over and say, "of course I'm happy to pay 5% in £3.5m when you're only charging other people 2% for loans secured on residential property with 35% LTV".Ozzie Osmond said:
Absolutely not. When you see rates of 2% being publicly advertised that should be your target! It makes no sense to just roll over and say, "of course I'm happy to pay 5% in £3.5m when you're only charging other people 2% for loans secured on residential property with 35% LTV".
Completely different criteria, risk and regulations involved...............Sarnie said:
Ozzie Osmond said:
Absolutely not. When you see rates of 2% being publicly advertised that should be your target! It makes no sense to just roll over and say, "of course I'm happy to pay 5% in £3.5m when you're only charging other people 2% for loans secured on residential property with 35% LTV".
Completely different criteria, risk and regulations involved...............Burwood said:
Sarnie said:
Ozzie Osmond said:
Absolutely not. When you see rates of 2% being publicly advertised that should be your target! It makes no sense to just roll over and say, "of course I'm happy to pay 5% in £3.5m when you're only charging other people 2% for loans secured on residential property with 35% LTV".
Completely different criteria, risk and regulations involved...............You just simply cannot compare an individual letting out a single property on standard BTL rates to someone wanting this level of Commerical lending....
Burwood said:
Sarnie said:
Ozzie Osmond said:
Absolutely not. When you see rates of 2% being publicly advertised that should be your target! It makes no sense to just roll over and say, "of course I'm happy to pay 5% in £3.5m when you're only charging other people 2% for loans secured on residential property with 35% LTV".
Completely different criteria, risk and regulations involved...............Sarnie said:
Burwood said:
Sarnie said:
Ozzie Osmond said:
Absolutely not. When you see rates of 2% being publicly advertised that should be your target! It makes no sense to just roll over and say, "of course I'm happy to pay 5% in £3.5m when you're only charging other people 2% for loans secured on residential property with 35% LTV".
Completely different criteria, risk and regulations involved...............You just simply cannot compare an individual letting out a single property on standard BTL rates to someone wanting this level of Commerical lending....
GT03ROB said:
Burwood said:
Sarnie said:
Ozzie Osmond said:
Absolutely not. When you see rates of 2% being publicly advertised that should be your target! It makes no sense to just roll over and say, "of course I'm happy to pay 5% in £3.5m when you're only charging other people 2% for loans secured on residential property with 35% LTV".
Completely different criteria, risk and regulations involved...............
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