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Case Profile
Our clients were looking to expand their growing business by buying more franchises, and needed funding to do so. They decided to refinance their home, valued over £3.5 million to fund the expansion.
Their home already had an interest only mortgage close to £1,000,000 with a large amount of equity in the house. The clients wanted to release £750,000 to fuel their expansion plans and were looking for an interest only loan at a fixed rate.
Unfortunately, our client’s current High Street lender couldn’t help them. Almost all lenders do not allow funds to be released from private residences to fund business expansion; therefore this made the situation more complex. Added to this, the clients had insufficient income on their latest accounts to meet lenders’ affordability models, even though expanding their business would lead to a significant increase in both turnover and profit.
Solution
Our team set to work researching all the options available, finding lenders willing to remortgage the property or offer a long-term second charge bridge on the property. Still, the clients could not meet the basic affordability criteria. However, our expert advisers managed to source a specialist short term, second charge lender who was prepared to advance the funds for business use on a rolled up, fixed rate interest basis which suited the clients needs.
This solution eliminated the clients affordability criteria issue, as the interest will be rolled up and paid back at the end of the term. It also meant our clients could plough all of the funding into their business and purchase the additional franchises, which will lead to future rises in their income.
Our relentless pursuit to find a solution led to incredibly happy clients with a lending product uniquely tailored to their specific needs.
Deal Highlights
| Loan amount: | £750,000 net advance |
| Rate: | 0.70% per month, fixed for the term of the loan |
| LTV: | 75% |
| Term: | 18 months |
| Type: | Interest only, rolled up and added to the loan monthly |
| Loan purpose: | Residential second charge |
| Lender’s arrangement fee: | 2.3% of loan amount |
| Early repayment charges: | 1 month’s interest in the first month, none after that |
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. Ask for a personalised illustration.
Your home or property may be repossessed if you do not keep up the repayments on your mortgage. Changes in the exchange rate may increase the sterling equivalent of your debt.
