What was the situation?
Earlier this year, I was approached by a husband and wife who both happened to be self-employed barristers. The couple were looking to refinance a stunning family holiday home in Cornwall which they had bought a few years ago, as the product on the property was coming to an end. However, my clients were also looking to purchase a new main residential property outside of central London with more green space in the next few months and, as such, were keen to ensure that the holiday home remortgage would not impact their purchase mortgage options when they found their dream family home.
What was the issue?
Effectively, this case became two separate mortgage deals that were negotiated months apart. However, despite the time difference, my clients’ needs required me to join the two transactions together in my thinking to ensure a situation didn’t arise whereby one facility caused the other a problem. As such, there were a few challenges I had to overcome along the way.
When we eventually came to focus on the purchase mortgage, the effects of the pandemic posed two different hurdles for my clients to overcome. Firstly, as self-employed barristers, their income had been impacted by COVID-19 and so I would need to settle any lender concerns over affordability. And secondly, as is the case for anyone purchasing a high-value property at the moment, the market was extremely competitive. The couple had already lost out on a few properties they had made an offer on and so were keen to move very quickly when they found the perfect new family home for them to live in.
What was the process?
First up, the holiday home remortgage. At LDN Finance we’re extremely adept in dealing with holiday let borrowing and have built strong connections with lenders who we know will be happy with clients who split their time living in and letting out their property.
Once I had secured the chosen lender, it was then a case of ensuring the remortgage was negotiated in a way that would work favourably alongside their eventual new purchase property. As a result, I ended up working with the lender to structure a straightforward remortgage with no additional borrowing, but changed the facility to an interest only basis. This would reduce monthly mortgage payments and bring costs down as low as possible, so that when the couple bought their new property, they wouldn’t have a massive mortgage payment that their new lender would have to take into account.
A short while after we had completed the interest only remortgage, my clients finally found their dream home in a quaint village just outside of London with lots of green space for their young family to play and grow. The property was valued at £1.4 million and my clients required 75% loan to value (LTV) to make the purchase work for them.
In order to ensure the couple were able to beat any competition and satisfy the estate agent and seller, I made sure that all documentation had been collected upfront and the case was pre-agreed with the underwriter so they could move quickly. I was also able to show my clients’ income and earning history in such a light that the new lender was confident that although there was a temporary impact on their earnings due to the pandemic, the work they had upcoming and their existing wealth profile would not pose an issue moving forward.
Ultimately, although it took quite a bit of extra documentation and information, the lender was happy that they were very good clients and were more than suitable for the mortgage.
What was the solution?
By the end of the process, I had negotiated two fantastic rates for my clients. The remortgage for their holiday home was secured on a five-year fixed rate at 1.89% on an interest only basis, whilst the purchase mortgage was secured on a five-year fixed rate at 1.67%.
Furthermore, to make the purchase mortgage payment more manageable because the couple now have two mortgages, I negotiated with the lender to put as much as was allowed on interest only (which was £700,000) and the rest of the borrowing on a repayment basis.
My clients were very happy that the remortgage had been approached in the right way at the start of the year to factor in the fact they were looking to purchase a new property.
Furthermore, my clients being barristers meant they had very good attention to detail which proved very helpful throughout the process in making sure that everything was set up correctly and went smoothly. Having previously lost out on a few other properties throughout the bidding process, they were more than thrilled that we were able to get a mortgage offer out within ten days which enabled them to purchase their dream home.
Lending solutions with LDN Finance
Are you looking to secure a high LTV interest only mortgage on a high-value property? At LDN Finance, our expert brokers have a wealth of experience in securing large loans on an interest only basis, however complex the circumstances.
We work closely with our trusted network of private banks and specialist lenders to arrange bespoke mortgage arrangements to suit your circumstances at competitive, market-leading rates. Get in touch with us today to organise an initial consultation.