Porting £1.35m residential mortgage whilst obtaining additional £885,000 BTL mortgage

What was the situation?

My clients, both successful financiers, were looking to move house but keep their existing mortgage whilst renting out their previous residence.

Their offer had been accepted at £1.7 million, and wanted a £1.35 million mortgage plus and additional £885,000 for their buy to let (BTL) property, lent against their former residence.

What was the issue?

Unfortunately, the clients current loan meant they were subject to a £35,000 early repayment charge if they changed lenders before their term was up, which they were keen to avoid.

In addition, some lenders were not able to stretch to the £885,000 in BTL lending required, because they were not comfortable with the repayment solely relaying on the potential rental income.

What was the process?

In order to find a viable lending solution, I carried out a thorough and detailed fact find to ascertain the clients’ circumstances and requirements. Using this, I was then able to harness my lender knowledge to source the most appropriate BTL lender for the background mortgage, whilst leveraging my contacts at the client’s current residential mortgage lender. I needed to confirm that they were happy for the clients to keep – typically known as ‘porting’ – their existing mortgage, and top it up. This way, I hoped the lender would allow them to keep their current mortgage interest rate and avoid the early repayment charge.

In discussing the application with their lender, I was also able to change the structure of the legacy lending to include a larger portion of interest only lending. In turn, this reduced the clients’ monthly payment. I was successfully able to get pre-agreement on both elements of the transaction from the respective lenders pre-application.

Additionally, I liaised with the clients’ solicitor and estate agent throughout the process to ensure all parties were working toward a shared goal. I was able to assist the client in renegotiating the purchase price after a lender down-valuation.

What was the solution?

At the end of the process, I was able to obtain a solution that involved a 75% loan to value BTL remortgage that was secured against the background property on a 2-year fixed rate, affording the clients the option to sell the property two years from now and reclaim the additional stamp duty paid on the purchase. This solution was obtained in combination with the required residential mortgage with 65% of the lending arranged on an interest only basis. This minimised the monthly costs, including a top up structured on a no early repayment tracker to maximise flexibility.

The clients were able to purchase their forever home and keep their existing property, including their existing rate. I helped them keep their monthly costs low by restructuring the lending on an interest only basis, thereby avoiding the £35,000 early repayment charge on the house move. They were delighted!

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