£2.6m Interest-Only Mortgage Structured to Preserve an Investment Portfolio
What was the situation?
Our clients, a married couple, were buying a £3.7m second home in Surrey, chosen to be closer to family. Their existing London home, valued at £4.1m, was to be retained.
One client was approaching retirement, with significant current employment income. The clients had built a substantial investment portfolio, structured to generate dividend income in retirement.
The case was introduced by the clients’ wealth manager, with the clients needing to move quickly to secure the property ahead of competing buyers. The objective was clear: complete the purchase without liquidating any of the portfolio.
What was the issue?
This was not a case that fitted most lenders’ usual criteria. The clients’ age restricted the term available, and with one of them approaching retirement, the income earner’s current salary alone would not support the full affordability position over the life of the loan.
Affordability had to be assessed across two income phases. Current salary income was significant, but with retirement approaching, long-term affordability would be underpinned by structured drawdowns from the portfolio.
What was the process?
Drew Somerston, Private Client Director, took the case to a high street lender’s senior underwriter to agree it directly.
Drew positioned the investment portfolio as the primary source of long-term affordability, not as a capital asset to be lent against. Working alongside the clients’ wealth manager and the senior underwriter, he established a drawdown plan aligned to a 15-year facility, with the affordability profile structured to match the lending term. The lender produced bespoke modelling outside their standard affordability systems to support the facility.
What was the solution?
A £2.6m interest-only mortgage was placed on a 15-year term at a 2-year fixed rate, with terms more than 1% below what the clients would have secured through their private bank, and materially lower fees. The portfolio remained untouched, used to evidence affordability rather than serve as security or deposit. Agreement in principle was issued within a day, with full underwriting to offer completed inside a week.
Our clients completed on the new property with the portfolio fully preserved and the retirement income left undisturbed.
Wealth managers and portfolio advisers regularly introduce clients to Drew where the lending decision sits inside a broader question of preserving a client’s long-term financial position. Cases of this nature form the core of Drew’s advisory work.
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