What was the situation?
We were recently approached by a first-time buyer couple who were looking to purchase a terraced house in Islington for £1.6 million with a large interest only loan of £800,000.
What was the issue?
Whilst one of the clients had an income of £20,000 p.a., the other had only recently set up his own business and thus had no viable income documentation that we could use when applying for the loan. As a result, the maximum loan we could achieve was nowhere near what my clients required, so we were forced to look into other solutions.
What was the process?
When evaluating all possible options, we reviewed our clients’ financial and personal situations in-depth to fully understand how we could secure the mortgage they required. Unfortunately, the mortgage couldn’t be secured on their incomes alone, so in order to find a potential solution, we branched out and looked to their wider support system. Luckily, one of their fathers was a high net worth individual and, although he had no direct income source, he had an investment and share portfolio worth over £30 million which more than sufficed when it came to supporting the borrowing needed.
After assessing all available options, the mortgage we secured was a ‘joint borrower, sole proprietor’ setup, with the client’s father supporting the mortgage without being a registered owner of the property at the land registry. In the future, this means the couple will have the option to remortgage the father off the loan when it becomes affordable enough for them to repay on their own. This setup also meant that we avoided £48,000 of additional stamp duty that would have been incurred had my client’s father become a registered owner of their property. To help with the affordability, the loan was held on a full interest only basis – something our clients’ will benefit from as their incomes grow enough to support the mortgage themselves.
Due to the father being in his sixties, we were also able to secure an extended term as the loan was supported by his large investment portfolio which will inevitably provide extra income beyond his retirement. This was very important as the clients are in their twenties and intend to live in the property for many years to come. Although this was outside of the criteria for the bank, our fantastic relationship with the chosen underwriter meant that they took a common-sense approach towards our clients’ circumstances. We were more than aware that it was crucial for us to move quickly and secure the correct solution the first time around with the impending stamp duty deadline.
What was the solution?
By choosing a high street lender, we were able to secure a brilliant rate of 1.6% for our clients. And, through leaning on our strong network, we were able to pre-agree this structure with an underwriter and provide a bespoke, private banking experience at high street rates and fees. Our clients were beyond thrilled with our service and were over the moon to have secured their dream property with a large interest only loan, despite the complexity of their case.
Lending solutions with LDN Finance
Are you looking to secure a large interest only loan to help finance the purchase of your dream first home? At LDN Finance, our expert brokers have a wealth of experience in securing property finance solutions to suit your individual circumstances – no matter the complexity – working closely with our trusted network of private banks and specialist lenders to formulate bespoke arrangements at competitive, market-leading rates.
Get in touch with us to organise an initial consultation.