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A Case Study
NAME: Chris Sullivan
AGE: 35
DEPENDANTS: Wife and two children
- Catherine (33)
- Tim (5)
- Sophie (3)
OCCUPATION: IT Consultant
EARNINGS: £35,000 p.a.
ASSETS: Equity in home - £70,000
Personal Pension - £10,000
Bank Deposits - £10,000
OBJECTIVE: To fund his and Catherine’s retirement and their children’s
university education.
SCENARIO:
Chris has had a personal pension for ten years which he is not happy with as it is
now worth less than the amount he has contributed in to it. His savings are in a
local building society gaining 1% net of tax interest. Chris feels his money is not
working as hard as it should be and wishes to find an alternative house for it.
Chris has always wanted to own property as he has heard that buying to let has been
profitable for many of his friends. The reason Chris has not purchased a buy
to let property before is because he has felt that he can not afford to do so, nor has he
had the time to look into it.
Chris registered his details with Stoneyard and decided to re-mortgage his home to
release £27,000 from his equity. With this £27,000 Chris purchased his first buy
to let property. He spent £15,000 on the deposit and £12,000 on other associated
costs. Chris enjoyed a good rental income from his property as well as good capital
growth. On average his property increased 5% P.A..
Five years after purchasing his first property he re-mortgaged it and released the
money for his second property. In year ten he re-mortgaged the two properties he
held in order to release funds to purchase two additional properties. He continued
to do this every five years. At year twenty when Chris was 55 and owned 16
properties each worth on average £397,990, which provided him with good rental income of
£750 each per month (in today’s terms), he retired. Chris was able to send
both his son and daughter to university from the income provided by the properties.
He also enjoys a good retirement income himself - owning property gave him the option to
retire early and enjoy more time with his wife.
Chris achieved his goal by continually re-mortgaging the properties he already owned in
order to release the funds for new ones. Together with the discount he was getting
from Stoneyard (on average 10-15%) and using the funds from his re-mortgages he found that
he could achieve good gearing for his investments, giving him a good income.
Chris’ properties were purchased by releasing the funds from his existing
properties. The only personal investment Chris made was the initial £27,000 to
start the process.
Chris’ plan looked something like this;
STEP 1 – Year 0
- Chris re-mortgaged his own house and released £27,000.
- Purchased: 1 apartment @ £150,000
- Achieved 15% discount and also added 10% (£15,000) from his own funds as a deposit.
- Excess(£12,000) Chris spent on other associated costs
STEP 2 – Year 5
- Chris’ buy to let property has increased 5% per annum and is now valued at
£191,441
- Chris re-mortgages his buy to let property with a gearing of 75%, releasing £31,080
(£191,441 x 75% = £143,580 - £112,500 (original loan) = £31,080 extra funds)
- Chris purchases a similar property to his first at £191,441, again achieving a discount
of 15% from Stoneyard, and adds 10% (£19,144) from his released funds.
- He uses the remainder of his released funds (£31,080 - £19,144 = £11,936) on
associated costs.
STEP 3 – Year 10
- Chris’ properties have again increased on average 5% per annum and are now valued
at £244,332.
- Chris re-mortgages both of his buy to let properties and releases £39,669 from each
property (£244,332 x 75% = £183,249 - £143,580 ( existing loan) = £39,669 extra funds)
- Chris purchases two further similar properties for £244,332. He again achieves a
discount of 15% from Stoneyard, and adds 10% (£24,433) from his released funds.
- He uses the remainder of his released funds (£39,669 - £24,433 = £ 15,236) on
associated costs.
STEP 4 – Year 15
- Chris’ buy to let properties have increased 5% per annum and are now valued at
£311,836.
- Chris re-mortgages all four of his buy to let properties and releases £50,628 from each
property (£311,836 x 75% = £233,877 – £183,249 (existing loan) = £50,628 extra
funds).
- Chris purchases four further similar properties for £311,836. He again achieves a
discount of 15% from Stoneyard, and adds 10% (£31,183) from his released funds.
- He uses the remainder of his released funds (£50,628 - £31,183 = £19,445) on
associated costs.
STEP 5 – Year 20
- Chris’ properties have increased 5% per annum and are now valued at £397,990
- Chris re-mortgages all eight of his buy to let properties and releases £64,615 from
each property (£397,990 x 75% = £298,492 - £233,877 (existing loan) = £64,615 extra
funds)
- Chris purchases eight further similar properties for £397,990. He again achieves
a discount of 15% from Stoneyard, and adds 10% (£39,799) from his released funds.
- He uses the remainder of his released funds ( £64,615 - £39,799 = £24,816) on
associated costs.
In twenty years Chris has managed to purchase 16 properties from a single investment of
£27,000 from the initial re-mortgage of his own property.
 previous,
on to Stoneyard Process 
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