The property: The property was a freehold 5-bedroom house suited for a family, all standard construction.
The finance: The clients were looking for a loan of 90% loan to value. They did not want to be tied in for long as they are looking to sell their flat. We needed a lender who would also consider the day rate rather than net profit in order to achieve the lending amount required.
– A 2-year mortgage (fixed or variable)
– Interest only element to keep the payment affordable
I needed to get this agreed on a case by case basis as there is no lender on the market which allows interest only at 90% loan to value. I made the client aware from the outset that even if I were to find a lender who would allow interest only, it would be a maximum of 50% due to not actually having a repayment vehicle other than sale of a property giving a net cash of £218,000. Usually the lender would require a large pension or investment that can redeem the interest only part on completion of the loan at retirement.
The Application: Due to the complexity of the scenario, I needed to get this pre-agreed by a business development manager and a specialist lender. I managed to get a lender that agreed with the merits of the case and offered 50% interest only even though it would be very high risk for them. The same lender also offered a variable rate with no early exit fees, so allowing the client to re-finance to a high street bank at a lower loan to value once the background property is sold.
Property value: £950,000
Loan amount: £855,000
Rate: 4.01% 2 year Variable
Term: 24 Years (until age 70)
Lender facility fee: 1% (8,550 added to the loan)
Lender exit fee: £0
Monthly payment: £3,208
Detail correct at the time of sourcing their deal.