A broker’s clients, Mr & Mrs H, were first time buyers and had just had an offer for £2,050,000 accepted on the property that they were currently renting. They were looking to borrow £1,742,500 (85% LTV) on an interest only basis.
The broker could not find any lender that would offer such a large loan size on an interest only basis, and also at such a high loan-to-value. Mr H was a senior banker with a £300,000 basic salary and a bonus of over £1,000,000 and Mrs H was a senior manager in retail, earning over £100,000 so income was not a problem. The clients wanted to be able to make unlimited overpayments as they both receive bonuses and want to be able to pay down the loan over the next 4 or 5 years.
The broker was happy for largemortgageloans.com to contact the client direct and we arranged to meet Mr H in his office to collect his paperwork and carry out a full fact find about his circumstances and priorities. We recognised that for such strong applicants there should be a private bank willing to offer these applicants a mortgage loan at a high LTV, if the clients were committed to reducing the LTV – using their bonuses – within the space of a year or two.
We placed the case with a private bank which offered the clients a mortgage of 85% based on an interest rate of 2.75% over Bank Rate, with a 0.60% arrangement fee. The bank was happy to do this on the basis that the clients committed to reducing the LTV to 75% by the end of January 2011. As a condition of the mortgage the bank also wanted the clients to commit to staying with the bank for a minimum of 1 year, but would allow unlimited overpayments provided that the mortgage was not redeemed in full for 1 year after completion.
To make matters more difficult the property was then down-valued by the surveyor by £50,000 leaving the client short of funds and their vendor would not move on the purchase price. The bank agreed to split the shortfall with the clients and lend them £1,717,500 (85.875% LTV) against the property, now valued at £2,000,000. This got the clients out of a sticky situation and they were delighted to be able to buy the property that they had set their hearts on.