Creative £2.8 million interest only remortgage with no regular income

What was the situation?

After having already spoken to two well-known London mortgage brokers who had failed to find him a solution, my client was introduced to me through a mutual private banking contact for assistance. My client was looking to secure an interest only remortgage on his £3.5 million home in South East London in order to release £2.8 million in equity to fund some home improvements, including a loft conversion and extension to the rear of his property.

What was the issue?

A consultant by trade, my client had slowly been winding down his contracting business to make way for his passion – property development. As such, whilst he now had an impressive property portfolio in the background, from a standard income perspective there was no feasible way he would be able to secure the amount of borrowing he was looking for.

It quickly became apparent that a mainstream lender was off the table – my client’s affordability and lack of traditional income being too tricky for them to navigate. I needed to find a lender that could think creatively about my client’s case and present a purely bespoke offering to suit his needs.

What was the process?

After reaching out to a trusted specialist private lender with an appetite for complex scenarios such as this, it was evident the solution to my client’s circumstances lay in the sizeable assets within his large property portfolio. It was also agreed that the loan would be on an interest only basis in order to bring down monthly repayment costs.

After laying out my client’s full financial and asset profile in the most favourable light, the lender was able to monetise his background property portfolio. To make this work, the bank had to first value the contained assets before assessing the rental income value versus the mortgage debt in order to effectively create a ‘quasi-income’.

This allowed the lender to look aside from his traditional PAYE and company accounts – as these alone would not have satisfied stringent affordability checks – and instead work off the quasi-income based on the equity sitting in my client’s portfolio.

What was the solution?

The brilliance of this case lay in the fact that the lender was only taking a charge against the main property itself, with no charge held over the background assets. In essence, this meant that if push came to shove and my client couldn’t repay the interest only debt on the loan, they could then lean upon their vast amount of background assets background to service the debt.

In order to satisfy any associated risk, I simply had to attain a written letter from my client to confirm there were no restrictions on the portfolio properties to be sold if required.

To the delight of my client and with thanks to my close relationship with the lender, I was able to secure the £2.8 million borrowing on an interest only basis over a five-year term. The bespoke interest only remortgage facility was agreed at a fantastic variable rate of 2.24% above Bank of England base rate, with a 1% arrangement fee.

Lending solutions with LDN Finance

Are you looking to secure an interest only remortgage on a high-value home in order to release equity? At LDN Finance, our expert brokers have a plethora of experience in remortgaging high-value properties. 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 and guarantee your satisfaction throughout each stage of the process. Get in touch with us today to organise an initial consultation.