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Case profile
We were approached by a mortgage broker who had been looking to help their clients buy an investment property in Kensington for £2.85M, and borrow up to 60% loan-to-value or £1.71M. The clients were a Malaysian couple who were resident in Malaysia, one of whom was employed for a large company, and the other had a 50% shareholding in the business that she was working for. The expected rental income for the property was £6,933 per month, which was not sufficient for many lenders to support a mortgage loan of up to £1.71M.
The enquiry had already been turned down by Bank of China who said that they could not offer the clients a mortgage as they were Malaysian citizens, and the clients had two sizable mortgages in Malaysia, plus another small investment property in the UK, which ruled out the lenders who take into account an applicant’s aggregate debt. We needed to find a mortgage lender who would be happy to take into account both applicants’ income, and who would also lend to non-UK resident foreign nationals.
Solution
We were able to find a bank willing to take into account the income from both applicants, if we could evidence their earnings using accounts, pay slips and tax returns. The bank agreed to offer the clients a loan amount of £1,710,000 on the basis that they could either choose to place £540,000 of unpledged cash with the bank upon acceptance of the offer, or they could choose to pledge the lesser amount of £136,000 to the bank for 4 years.
The clients were very happy to place £540,000 of unpledged cash with the bank, which they could then withdraw after the completion of the purchase, and were delighted to be able to borrow up to 60% LTV at such a competitive pay rate and with such a low arrangement fee being charged. The mortgage broker was pleased to receive commission of £3,420 after completion and maintain their relationship with the client.
Case highlights
| Loan amount: | £1.71 million (60% LTV on property value of £2.85 million) |
| Rate: | 3% over 3month cost of funds (currently 0.52%), current pay rate 3.52% |
| APR: | Overall cost for comparison 3.53% APR representative variable |
| Term: | 30 years |
| Type: | Repayment |
| Loan purpose: | Buy to Let purchase |
| Lender’s arrangement fee: | £500 |
| Early repayment charges: | 1.5% of outstanding loan amount within the first year |
Notes
This case study is for information and illustration purposes only. It is not an offer, or suggestion of an offer. Each mortgage case is assessed on an individual basis and there is no guarantee that the solution described here can be repeated in the future.
Please note that this specific deal may not be available to – or suitable for – all customers, dependent on their individual circumstances. The rate quoted may become out of date at short notice and may not be available at the point at which customers enquire about it. This document may not contain all the information needed for customers to make a decision and they should seek advice.
Overall cost for comparison 3.53% APR representative variable based on 30 years at 3.52%. The actual rate available will depend on your circumstances. Ask for a personalised illustration.
A typical fee of 1.17% of the mortgage amount is payable. Of this, 20% is payable on application and the balance of 80% on completion. For example on a mortgage application of £100,000 the fee would be £1,170 in total. Of this, £234 (20%) would be payable on application and the balance of £936 (80%) on completion. The total fee is non-refundable.
