The client: Our client is self-employed and runs a successful company in the finance sector. The problem, as far as many lenders are concerned, is that he hasn’t been self-employed for long so doesn’t have much of a track record. He previously worked in the banking sector and became self-employed a year ago. With most lenders requiring a minimum of two years’ trading history, finding a lender which would lend to him was not straightforward.
The property: The client wanted to remortgage his four-bedroom house in Surrey, worth £800,000.
The finance: The client wanted to remortgage and release some equity at the same time to support his business. He only had a small mortgage of £202,000 but wanted an additional £478,000, with total borrowing of £680,000.
- A five-year fixed-rate mortgage. Even with the extra borrowing the overall loan-to-value remains low, mortgage rates are cheap and the client was certain he didn’t want to move or change anything for at least five years, so a five-year fix made sense.
- Interest only, as the client wants to keep the payments low for the next few years while the business gets going.
- A lender prepared to consider a borrower who has been self-employed for just one year and who also wants an interest-only mortgage.
After sourcing the whole mortgage market, we identified a competitive rate enabling the client to borrow the full £680,000 on an interest-only basis. The lender was comfortable with just one year’s accounts. We were able to secure a residential mortgage on a market-leading five-year fixed rate.
As a bonus, the lender offered the ability to add the arrangement fee to the loan.
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 before submitting the full application.
The application process: Once we had found the lender who could provide what we wanted, we very quickly moved to survey and mortgage offer. We were able to move the application forward with speed as we had already pre-empted and requested all the necessary documents.
Property value: £1,000,000
Loan amount: £680,000
Rate: 1.79% 5-year fixed
Term: 25 years
Lender facility fee: £999 added to the loan
Monthly payment: £1,016