What was the situation?
I was approached by a client who was looking to complete a residential remortgage as their current mortgage product was coming to an end. The clients were UK based working professionals who were in receipt of modest multiple income streams – including pension and earned income – but had significant SIPP/ISA savings.
The property in question was their family home in Home Counties which was valued at almost £1.3m. We were looking for a small advance of £200k on a full interest only basis.
Although the client had the option of using their savings to redeem the mortgage, we were tasked with securing a mortgage that allowed them to retain the facility beyond their current mortgage expiry date as they did not want to liquidate their savings at this time.
What was the issue?
A challenge arose with the enquiry because the lead applicant is over 70 years of age. Although their job role was non-manual and managerial, they intended to continue working to 80 years of age, at which point they would look to retire.
Due to taxation purposes, they were drawing a small pension alongside their earned income. The earned income alone was not sufficient to secure the desired mortgage, therefore it was important for me to find a lender who can accept the future pension income as security.
What was the process?
Unfortunately, some high street lenders were unable to assist in this instance as they do not have the appetite to lend to individuals over 70 years old. Furthermore, the client had explored the option of equity release but found the products limiting and not suitable for their longer-term plan.
There was a strong merit to this case due the wider assets held in the background by the client. It was therefore evident that we had to approach a lender who can understand and account for this accordingly, with manual underwriting.
Due to the complexity of the transaction, I had to approach every lender on an individual basis to ensure it was correctly assessed due to the various nuances of the case.
What was the solution?
Through diligent processing, I was able to secure a market leading rate with a well-established building society. They were able to formulate a future income from the pension by taking an assumed percentage drawdown of the total value of the pension of fund, which retained the value of the fund based on assumed growth rate.
The deal that was offered was a full interest only facility of £200,000 to age 80. The mortgage product has an initial pay rate of 3.85% with no lender arrangement fee, which was the most competitive deal in the market (for non-old people too!)
This allowed us to lend the required amount without the use of the clients earned income, on a full interest only basis. We were also able to take the mortgage to age 80, which provided the client with an extra five years compared to their existing mortgage. This provided the clients peace of mind knowing that a mortgage facility remained for this length of time. Overall, the clients were extremely pleased with the outcome.
Lending solutions with LDN Finance
Are you needing to remortgage but would like some advice about the most suitable options available? 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.