Our client is a senior banker who approached us to help purchase a new family home for £2,000,000 without putting in any cash. He wanted interest only to suit his income structure and the ability to draw the facility deposit on exchange of contracts. The total cost of the purchase, including stamp duty and associated costs was £2,159,000. The existing mortgage had to be repaid, so a total new mortgage facility of £2,375,000 was needed. On the residential mortgage they required security of costs and a flexibility facility to enable them to drawdown and repay as required.
They have two flats worth £1,400,000 and £650,000 (which will be sold in the short term with the full proceeds used to reduce the mortgage). There is an HSBC mortgage of £216,000 secured on the current home, whilst the smaller flat is unencumbered.
The priorities were to have £650,000 on a no penalty facility so that that part can be repaid in full as soon as the smaller flat sells, plus £325,000 on an offset facility so that the clients can use their current and future savings in a flexible tax efficient manner. They wanted £700,000 on a 3 year fixed rate for medium term security against the effects of increasing mortgage interest rates, plus another £700,000 on a 5 year fixed rate for longer term security.
To enable the clients to purchase at £2,000,000 with no deposit, and to avoid expensive bridging finance, we took a holistic view and identified a private bank which could provide the complete solution and negotiated excellent terms for the clients. This involved a residential mortgage of £1,025,000 and buy to let mortgages totalling £1,350,000. LML also arranged for the bank to advance an initial £200,000 secured solely on the unencumbered flat on exchange of contracts.
|£2.375 million (70% LTV on combined property value of £3.393 million)
|£700,000 residential fixed for 5 years at 3.70%, £325,000 residential variable with offset for 5 years at 2.95%, £700,000 buy to let fixed for 5 years at 3.76%, £650,000 buy to let variable for 1 year with no erc at 3.50%
|Overall cost for comparison 4.6% APR representative variable
|Residential Purchase & Buy to Let Remortgage
|Lender’s arrangement fee:
|0.8% of loan amount
|Early repayment charges:
|Nil on variable elements, mark to market basis on fixed elements
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 these terms 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 4.6% APR representative variable based on 5years at 3.7%, 2.95%, 3.76% & 1year at 3.5% (as detailed above), lender’s arrangement fees of 0.8% x £2.375million (£19,000). 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.
Your home may be repossessed if you do not keep up repayments on your mortgage.