When you finance an income-generating property, the most important question is whether the property can carry its own repayments. In this model, the obligations are repaid from the property's income and rental revenue. Your own savings and salary still matter to the bank, but the building's cash flow is at the centre of the assessment.
How repayment from rental income works
The bank calculates the instalments based on the financing amount, the profit or interest rate and the tenor. It then compares those instalments with the net rental income the property actually produces. The stronger and more stable the income, the more comfortably it covers the repayments, and the better the file looks to the bank. Many banks also expect a safety margin, so the income should exceed the instalment, not just match it.
Initial property requirements
- Fully leased: the property should be fully occupied with valid tenancy contracts, so the income is real and documented.
- Relatively new: preferably no more than 7–8 years old, according to the bank's requirements. Newer buildings usually need less maintenance and are easier to value.
- Suitable rental income: an initial annual rental income between 8% and 10% of the property's value, subject to verification of the actual net return.
Why net return matters
The advertised yield is often calculated on gross rent. Banks look at what remains after service charges, maintenance, management costs, insurance and expected vacancies. We work through these figures with you, using tenancy contracts and service-charge statements, so that the return you rely on is the return the bank will accept.
Documents usually requested
- Title deed or sale agreement, and the latest valuation if available.
- Rent roll with copies of all current tenancy contracts.
- Service-charge statements and maintenance records.
- Your identity, income and bank statements, or company documents if buying through a company.
Who is it for
- Investors buying a leased building, floor or group of units who want the income to cover the financing.
- Owners of existing leased properties who want to release capital through refinancing.
- Companies that prefer an income-producing asset over keeping large cash balances.
How it works with Lugain Global
- Income review: we collect the rent roll, tenancy contracts and service-charge statements.
- Net return calculation: we estimate the actual net return and compare it with the expected instalments.
- Bank matching: we identify the partner banks whose criteria fit the property's age, income and location.
- Submission and negotiation: we submit the file, answer the bank's questions and negotiate the terms within its policy.
- Completion: we follow up on valuation, final approval, signing and registration.
Important to know
Rental income can fall if tenants leave or the market changes, and you remain responsible for the instalments in every case. The 8% to 10% range is an initial screening criterion, not a promised return. Each bank applies its own requirements and may be stricter than described here. Lugain Global is a financing broker, not a lender, and does not guarantee approval or returns.