£700k Remortgage to Raise Capital for a Home Extension

What was the situation?

Our client, a senior chambers professional whose income included a substantial annual profit share, owned a freehold family home in Essex with his wife. The property was valued at £1,100,000, with £510,000 outstanding on the mortgage.

The couple planned an extension to create their long-term family home and needed to remortgage to raise capital of £190,000 for the works. The mortgage would remain in joint names, with affordability assessed on his income alone.

The client had approached his existing lender directly, but they were unable to offer the additional borrowing. He turned instead to Jon Stuart – Mortgage Adviser, who had assisted him years earlier when he arranged the purchase finance. Jon had recently joined LDN Finance and the client was delighted he could use his services again.

What was the issue?

The client needed total borrowing of £700,000 at 64% loan to value. The equity position was strong, but existing debts limited affordability, and lenders that counted those commitments in full would not lend the amount required.

With his profit share paid annually, the structure needed to deliver two things: a manageable monthly payment, and the ability to reduce the balance each year without early repayment charges.

What was the process?

Jon began work six months before the current product ended. Many lenders allow a new rate to be agreed up to six months ahead, so a rate could be secured well before it was needed.

Drawing on his knowledge of lender criteria, Jon identified a lender that would disregard the existing debts in its affordability assessment. That lender also offered the lowest rate among the options he sourced.

A part and part structure balanced affordability with flexibility: £430,000 on repayment and £270,000 on interest only, reducing the monthly commitment compared with full repayment. The interest only portion would need to be repaid at the end of the term. The product included an annual overpayment allowance of up to 10% of the balance, without early repayment charges.

The application was submitted in March, and Jon managed the case through to completion in August.

What was the solution?

The lender agreed a £700,000 remortgage over a 29-year term on a two-year fixed rate, repaying the existing mortgage and releasing £190,000 for the extension.

Between application and completion, mortgage rates rose. Had the client waited until the product ended, the rate available would have been almost one percentage point higher. Starting early meant his rate was already secured.

The structure reflected how the client was paid, keeping monthly payments manageable while allowing each profit share to reduce the balance. Once the extension is complete, the increased property value may allow a future remortgage at a lower loan to value.

The case shows the value of advice at remortgage, and of acting early. Jon arranged borrowing the existing lender could not offer. Agreeing a rate six months ahead and monitoring the market through to completion meant the client was well placed whichever way rates moved. Had they fallen, Jon would have reviewed a switch to a lower rate before the new mortgage began.

As Finance Service Partner to the Bar Council, LDN Finance advises members of the Bar, chambers professionals and their families on mortgages and protection throughout their careers, with the expertise to structure around variable income and profit share.

If your mortgage product ends within the next six months, speak to Jon Stuart or one of our advisers about your remortgage options and securing your next rate early. Get in touch.

High-value lending solutions with LDN Finance

Are you looking to purchase a new property but have a complex income structure? We’re here to help you find a solution – no matter how complex your circumstances. At LDN Finance, our specialist brokers have extensive experience in providing creative solutions to secure large loans for our clients.

We work closely with our trusted network of private banks and both high street and specialist lenders to arrange bespoke mortgage arrangements to suit your circumstances at competitive, market-leading rates.

Get in touch with us to organise an initial consultation.