£2 Million Buy-to-Let Purchase in Central London

Historical case study: This case was completed in 2016 and reflects the lending market, criteria and circumstances at that time. It is provided for illustrative purposes only and should not be taken as an indication of current lending terms or availability.

One of the more interesting buy-to-let cases I worked on involved a couple looking to purchase a property in Central London for approximately £2 million.

The requirement itself was relatively straightforward. They were looking for around 65% loan-to-value (LTV) finance on an investment property. What made the case more nuanced was their wider financial position.

The applicants were UK-based and had previously owned buy-to-let property. They had recently sold one of their properties and intended to use the proceeds towards the deposit for the new acquisition.

At the time, however, they were renting their own home rather than owning a residential property. They also had two established limited companies generating strong profits, although they drew relatively modest personal incomes from those businesses.

That combination meant the case needed to be presented carefully.

Why Was the Buy-to-Let Application More Complex?

A lender looking at the application could reasonably ask why applicants who were renting their own home were seeking to purchase a £2 million investment property.

The answer was in the wider circumstances.

The applicants had a long-term tenancy on a property that was more suitable for their family and conveniently located for their children's school. There was therefore a clear reason for continuing to rent rather than purchasing a separate residential home.

At the same time, they had previous experience as buy-to-let investors and had recently released capital through the sale of another property.

Their businesses also provided important context. Although their personal drawings were relatively modest, both companies were established and profitable.

The challenge was therefore not simply finding a lender willing to provide 65% LTV finance. It was finding a lender prepared to consider the complete picture rather than assessing the applicants purely through a standard residential mortgage model.

How Was the Finance Structured?

We reviewed the applicants' wider financial position, including their business interests, existing commitments, previous property experience and the proposed investment.

The objective was to demonstrate that the Central London property was a genuine investment purchase and that the applicants' decision to remain renters did not undermine the proposed buy-to-let structure.

The transaction ultimately secured a 65% LTV buy-to-let mortgage on a fixed-rate, interest-only basis, subject to the lender's criteria at the time.

This allowed the applicants to proceed with the purchase while using the proceeds from their previous property sale towards the acquisition.

What Made the Case Interesting?

For me, the important part of this case was not simply the size of the mortgage.

It was the fact that the applicants did not fit neatly into a conventional lending profile.

A traditional assessment might have focused heavily on their relatively modest personal incomes and the fact that they did not own their own home. Looking at the wider circumstances provided a much more complete picture.

This is something I have seen repeatedly over the years, particularly when dealing with high-value property and more complex borrowers.

A lender's criteria can make a significant difference to whether a transaction works. Two lenders can look at the same borrower and reach very different conclusions because they assess income, assets, property and overall circumstances differently.

That is why I have always believed that lender selection should come before trying to force a borrower into a standard lending model.

What Does This Historical Case Demonstrate?

This case demonstrates the importance of understanding the full circumstances behind a buy-to-let transaction.

The applicants had previous investment experience, proceeds from a property sale, profitable businesses and a clear reason for continuing to rent their own home. Taken together, those factors helped provide the wider context for the proposed investment.

It also illustrates why a borrower who does not fit a conventional profile should not necessarily assume that finance is unavailable.

The lending market has changed considerably since this transaction completed in 2016, and the terms available today may be very different. However, the underlying principle remains relevant: complex property finance often requires an assessment of the borrower, the property and the proposed structure as a whole.

For high-value purchases, identifying lenders whose criteria are genuinely aligned with the transaction can be just as important as the headline interest rate.

Islay Robinson
CEO and Founder, Enness Global

Historical case study: This case was completed in 2016 and reflects the lending criteria and market conditions applicable at that time. Current lending criteria, rates, fees and availability may differ. This case study is for illustrative purposes only and does not constitute financial or mortgage advice.

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