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Our Case Studies Short-Term Lending for Your Dream Home

Short-Term Lending for Your Dream Home

An innovative approach to short-term lending secures our clients their dream home

Are you looking for a short-term loan to secure your dream property? We have the banking contacts to provide a tailored solution where other lenders may not be able to help. To discuss this or any other large or complex mortgage case, please contact us on 020 7519 4984 or email us.

Case Profile

Our clients were retirees with several investment properties, who had seen their dream home come onto the market. As a unique, listed 14th century farmhouse, they knew they needed to act fast to secure the property and they had put down a deposit with capital released from a previous property sale. However, the bulk of their equity was tied up in their portfolio of investment properties, which were all mortgaged and would take time to sell.

The couple were looking to raise 55% of the purchase price of their dream home and their first thought was to look to a short-term, bridging loan. However, this would not have passed affordability criteria based on their retirement income. Additionally, a bridging loan could have become very costly with set up and renewal fees, and high interest rates. The clients had no guarantee on how long it would take to sell their investment properties and we wouldn’t suggest entering into this type of agreement without a finite timeline.

Solution

Our specialist advisers scoured the market for the options available and recommended a two-year, interest only mortgage with no early repayment charges. The lender acknowledged that the mortgage was unaffordable on retirement income alone and therefore an additional fund equating to two years’ worth of interest payments was lent as an additional sum. This was then placed in a serviced interest account from which the lender would take the mortgage payments.

This solution provided the lender the security they needed to offer our clients the loan, and it provided our clients with the time they needed to sell their investment properties at the right price. Most importantly, it meant they could secure their dream home and, once their capital is released from their property portfolio, they will own it outright and unencumbered.

Deal Highlights

Loan amount:£325,000
Rate:4.99%
APRC:Overall cost for comparison 7.0% APRC representative variable
LTV:55%
Term:2 years
Type:Interest only
Loan purpose:Purchase
Lender’s arrangement fee:1.5%
Early repayment charge:None

 

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 7.0% APRC representative variable based on 24 payments over  2 years at the lenders variable rate, currently 2.89% with a loading of 2.10% giving a current payable rate of 4.99%. Because all, or part of, the mortgage is currently, or will revert to a variable interest rate mortgage, the actual APRC could be different from this APRC and the payments could increase, if the interest rate of the loan changes. For example, if the interest rate rose to 10%, the APRC could increase to 12.50%. The actual rate available will depend on your circumstances. 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.

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This Month’s Top Fixed Rate

Fixed rate
Initial rate: 1.35%

Period: 2 years

Rate will revert to a variable rate, currently 4.99% thereafter
The overall cost for comparison is 4.46%

Get This Rate

This Month’s Top Variable Rate

Variable rate
Initial rate: 0.97%

Period: 2 years

Rate will revert to a variable rate, currently 4.99% thereafter
The overall cost for comparison is 4.37%

Get This Rate

Some of this month's top interest rates are listed above; the actual rate will depend on your circumstances. Please note that this information does not contain all the details you need to choose a mortgage, ask one of our advisers for a personalised key facts illustration on 020 7519 4900. The rate displayed may become out of date at short notice.

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