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Wednesday September 11, 2019

When a property is still in development stages, it’s often more complex to secure a mortgage. Lenders can only value the property as it is presented; therefore if a home is still under construction it’s highly likely the valuation they will offer will be significantly lower than the value of the finished property.

Case profile

Our recent client was faced with this issue. They were looking to borrow £700,000 to buy a property which was still at ‘second fix’ stage. Its value once finished was £1.875m but it wouldn’t achieve that valuation in its current state. Therefore, our adviser Paul Fredericks worked with the lender to agree two valuations; one at the time of the mortgage agreement and a further valuation when the property was completed to provide the lender with the necessary assurances.

Added to this challenge was the income multiple; our client had recently moved roles and, as a result, had moved onto a pay structure which included an annual bonus as a significant portion of their income. As there was no way to guarantee this bonus, the amount our client was looking to borrow would prove a stretch based on regular affordability tests.


Our team worked with the mortgage provider to explain the client’s background and track record of income. They also worked with the lender on a manual affordability test looking deeper than just income multiples, which found that our client was able to afford the loan required.

Deal Highlights

Loan amount:
1.90% fixed for 2 years
Loan To Value:60%
APRC:Overall cost for comparison 3.40% APRC representative variable
Term:22 Years
Type:Interest only
Loan purpose:Purchase
Lenders arrangement fee:£499 paid on completion
Early repayment charge:
3% of the capital balance less 10% of the capital balance

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 The rate quoted may become out of date at short notice and may not be available at the point at which customers enquire about it.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 3.40% APRC representative variable based on 24 monthly payments at a fixed rate of 1.90% followed by 241 monthly payments at the lenders variable rate, currently 3.45%. Total amount to be repaid £1,219,367.68. As the mortgage rate is not fixed for the duration of the loan this amount is illustrative and may be vary in particular as a result of variations in interest rate.

Because part of the loan is a variable interest rate loan, the actual APRC could be different from this APRC if the interest rate for your loan changes. For example, if the interest rate rose to 10.20%, the APRC could increase to 10.90%. The actual rate and product available will depend upon individual circumstances and may not be available to everyone. Ask for a personalised illustration. 

Your home or property may be repossessed if you do not keep up repayments on your mortgage.

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Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Changes in the exchange rate may increase the sterling equivalent of your debt. You may have to pay an early repayment charge to your existing lender if you remortgage. Think carefully before securing any other debts against your home. is a trading name of Ltd, Aegon House, Ground Floor Suite, 13 Lanark Square, London, E14 9QD authorised and regulated by the Financial Conduct Authority (FCA). Our FCA registration number is 302228 and can be viewed by visiting the FCA website: The FCA does not regulate tax advice or some aspects of commercial, buy to let, overseas mortgages, bridging finance, finance and asset lending. Ltd is a licensed credit broker, and not a lender. Ltd Registered in England and Wales No: 5070990 Registered Address: As above. The guidance and advice contained within the website are subject to the UK regulatory regime and is primarily targeted at UK customers. Calls may be recorded for training and monitoring.
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