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Case Profile
Our clients, a professional couple, approached us as they wanted to raise an additional £600,000 against their residential property.
They were looking to convert their property back to a single dwelling. The property, located in Central London, was a 5 storey house purchased in 2012 which had previously been renovated to include a self-contained flat in the basement.
The extra funding would bring their total lending to £3.15million or 70% LTV against the property now worth £4.5m and the clients were looking to maintain their mortgage arrangements on an interest only basis.
The clients were in their 50’s and also had an outstanding mortgage balance secured against a second home therefore they did not meet the affordability criteria of their existing lender. They were also unable to meet the lender’s criteria regarding a satisfactory repayment vehicle, as they intended to sell the property and down-size upon retirement.
Solution
Using our extensive knowledge of private banks, we were able to source a private bank remortgage with a loan amount of £3.15m on an interest only basis over a term of 5 years, based upon a current property valuation of £4.5m.
The private bank based the affordability on income alone, not taking into account the mortgage on the second property.
We also highlighted to the lender that the property would be worth at least £5.7m once the works had been completed and therefore were able to satisfy them that once the couple had downsized there would be sufficient equity to repay the interest only mortgage.
Deal Highlights
| Loan amount: | £3.15million |
| Rate: | 5% margin over 3 month libor (capped at 1%) to give a current pay rate of 6% for 12 months during the development works, followed by 3.75% margin over 3 month libor (capped at 1%) to give a current pay rate of 4.75% after completion for a further 48 months |
| APR: | Overall cost for comparison 5.3%APR representative variable |
| LTV: | 70% |
| Term: | 5 years |
| Type: | Interest only |
| Loan purpose: | Residential remortgage |
| Lender’s arrangement fee: | 1% of the loan amount |
| Early repayment charges: | 3% in year 1, 2% in year 2, and 1% in year 3 |
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 5.3%APR representative variable. Lender’s arrangement fees of 1% of the loan amount. The actual rate available will depend on your circumstances. Ask for a personalised illustration.
largemortgageloans.com is a trading name of largemortgageloans.com Ltd. A fee of up to 1.17% of the mortgage amount is payable, of this 20% is payable on application and the remainder on completion, e.g. on a mortgage of £1,000,000 the fee would be £11,700 of which £2,340 would be payable on application and the remainder of £9,360 on completion. The precise amount will depend on your circumstances.
Your home or property may be repossessed if you do not keep up the repayments on your mortgage.
