Portfolio Refinancing with Reduced Income


Enness Commercial Finance specialist broker, Peter, was approached by a client looking to do a portfolio refinancing with reduced income consisting of properties across the UK. My client owed around £4.5 million on the portfolio valued at £6 million with his current lender taking a charge over all 15 properties. Having previously been a highly skilled professional earning around £750,000, my client had left his job and was now earning significantly less.

Due to this change in circumstances, his existing lender was planning to convert all his mortgages from an interest only to a capital and interest basis, meaning the rental income would not be sufficient to cover the repayments. With my client not earning enough to make up the shortfall, he was faced with the prospect of having to sell his entire portfolio.

My client decided to sell three of his properties which left him with a portfolio worth around £5 million and an outstanding loan of £3.5 million. I found a lender – a mutual building society – who was prepared to take the whole portfolio but they were quoting a rate of 5.39 per cent. I felt that with some extra work, my client could do better.

Consequently, I approached a number of lenders and split my client’s portfolio between three specialist buy to let providers. The 11 remaining investment properties were underwritten on a ‘buy to let’ basis whereby my client proved his earnings and the rent covered the interest only payments with a 25 per cent cushion. I also arranged a separate loan for his main residence.



By splitting the properties between lenders, my client was able to benefit from two year fixed rate mortgages that ranged between 3.84 per cent and 3.89 per cent. This saved him over £50,000 each year in interest payments compared to refinancing the portfolio with one lender. I was also able to increase the total borrowing slightly, to £3.8 million. This enabled my client to repay a £180,000 loan on a property in Italy and to cover the costs of the refinance.

Faced with the real prospect of having to sell his property portfolio, I was able to help the client to retain the majority of his investment homes and secure a low interest rate on his remaining borrowing.

Want to Learn more?