Last Minute Re-Mortgage for a Contractor

English Country Cottage

The clients: Our client was looking to switch to an alternative fixed rate as his current residential mortgage rate was due to expire in approx. 2 weeks so we had to make alternative arrangements quickly to avoid the client from switching on to the lenders high standard variable rate. Our client is a Contractor but unfortunately his current contract had expired due to covid-19 and at present he was looking for a new contractual agreement.

The property: Located in the suburbs of Kent and is a 5 bedroom detached property that has been valued at £1,250,000 which the client bought back in 2009 and his current mortgage repayments on a two year fixed rate mortgage was costing him £1,467 pcm.

The finance: The clients’ existing mortgage is about to revert to the lender’s Standard Variable Rate which means his monthly payments will increase to £4,023.

His Key requirements:-

  • A full Interest only mortgage in line with his existing arrangements which enabled the client to keep monthly repayments as low as possible.
  • A lender that turns around applications quickly.
  • The ability to add the lender arrangement fee to the loan.
  • A Lender that would allow to switch to an alternative rate even though he was in between contracts.

We are aware of lenders that are flexible with interest only mortgages however we were restricted to options due to the client’s current employment position and the high loan to value. We decided that the most suitable and cost-effective option was to negotiate with the clients existing lender. Through detailed negotiations with the underwriters we were able to switch and offer the client a competitive market leading 2 year fixed rate.

The new product was agreed on the current method of repayment which was interest only on the full £1,018,000 allowing the method of repayment as sale of mortgaged property as client was looking to downsize before the end of the mortgage term. This new product would mean that the clients monthly payments will be £2,059 less each month from what he would have been paying if he reverted onto their existing lenders SVR.

As an added bonus, this new lender is offering a free valuation and as we were using the clients existing lender no conveyancing work was required.

These features and benefits really appealed to our client and we were able to submit a decision in principle and get approval from the lender and a mortgage offer being produced within 24 hours.

The application process: To support the mortgage application, the client supplied us with proof of identity, address and bank statements confirming savings and affordability. We were delighted to inform our clients that the lender had issued them with a formal offer for the full amount.

We arranged the completion of the Product Transfer to coincide with the end of the clients existing fixed rate product which prevented the client paying any Early Repayment Charges or switching onto the lenders high Standard Variable rate.

Property value: £1,250,000
Loan amount: £1,018,000
LTV: 81%
Rate: 2.04% 2 year Fixed
Term: 18 Years
Lender facility fee: £999 added to the loan
Monthly payment: £1,964
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