One of my clients, Philip an IT consultant, recently completed on a purchase of a three bedroom house in Edmonton North London. It was his first venture into property investment and so I was impressed at how wisely he had bought. Furthermore it’s encouraging to see that it is still possible to acquire property in areas of London that provide good prospects of capital growth yet offer sensible positive cash flow from day one.
Using an 85% buy to let mortgage, I was able to arrange funding for him as follows:-
Purchase price £240,000
Mortgage £209,100 (includes lenders fee being added)
Interest Rate 4.89% (2 Year Discounted Variable rate)
Rent £1300 pcm
Gross Yield 6.5%
Monthly Interest £852.08
Gross monthly cash flow £447.92
Gross return on capital invested 14.93%
The 85% product has no early repayment charges at any time, so as the property increases in value he will be able to release equity or refinance to recover his initial investment.
He was also able to arrange a corporate let with a local agent who provided him with a guaranteed rental for the next two years. Although just below market rent this was offset by no management fees being charged.
Edmonton offers excellent transport links with the journey from Edmonton Green BR station to Liverpool St taking only 25 minutes. The Tottenham Hotspur FC £400m new stadium and regeneration project, which includes shops, parks, 1650 new homes and 5000 new jobs is only a mile away.
You can find similar properties for sale to this example in the N18 and N9 postcodes.
If you would like to learn more about this case study or require mortgage advice please contact me.