What was the situation?
I was contacted by a HNW client of mine, whose mortgage was up for refinance as their current fixed rate was coming to an end. They wanted to utilise a large lump sum of savings to reduce their mortgage payments in light of economic volatility and increased rates. However, in an ideal world they wanted to retain access to these funds in case they needed them for emergencies.
The property, a large family home in London, required a £1m mortgage against its value of £3.5m. The client had £1.2m in savings that could be used, but wanted to borrow funds rather than use existing savings to retain wealth. All the while continuing to earn interest on savings which were higher than the prospective mortgage rates.
What was the issue?
A complexity in this application was finding a way to reduce the clients mortgage payments by using their savings – either all or some of it – whilst retaining access to the funds if possible.
What was the process?
Despite being a HNW client, the client’s income did not correlate to the affordability; even though the savings could pay off the mortgage amount in full. As such, I needed to find a lender that would take a holistic view on the wealth profile of the client.
Using long standing lender relationships, knowledge and market experience, I discussed various options with the client and an offset mortgage was suggested.
What was the solution?
In speaking to the lender, I urged them to take a holistic view of the clients wealth profile based on savings rather than income.
The final facility secured was an offset mortgage linked to their savings. This enabled them to get the full benefit of the savings against mortgage payments, whilst also retaining access to 100% of their savings funds.
This resulted in an effective 0% monthly mortgage payment on the surplus funds, as only the interest amount earned was repaid monthly.
Lending solutions with LDN Finance
Are you exploring ways to help reduce your monthly mortgage payment? Perhaps an offset mortgage may be of interest? We’re here to help you find a solution – no matter how complex your circumstances. At LDN Finance, our expert 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.