Large interest-only mortgage for late-60s client

Area
Surrey
Capital Raised
£1M

The Scenario

Our client was 68, coming up for retirement, and keen to buy the property he’d had his heart set on in Devon.

He was a HNW earner, his current £1.2M home in Surrey was mortgage-free, and he had other assets to draw on (rental properties, and a classic car collection).

But his age, and the term of a mortgage which would take him well beyond retirement, was going to be a challenge for lenders.

When the house he’d always wanted came on the market he approached his current bank.

They were going to want to mortgage both his Surrey home, and the house he wanted to buy: already two sets of set-up costs. But the surveyor they sent to do the valuation of the Devon property didn’t like the type of foam insulation and gave it a nil valuation. Unhelpful…

The Solution

We approached a private bank on his behalf who were willing to look at mortgaging just his current home, plus a £250K rental property he owns mortgage-free that they're not requiring a valuation on, with no charge against the next home he’s looking to buy.

Considering his age we would be looking at a mortgage with a maximum term of five years.

For a million-pound mortgage on the standard capital repayment terms he was previously offered, the monthly repayments (at 3.25% over base) for a mortgage term of five years would have been an eye-watering £18,400 a month.

A stretch for even the highest of HNW individuals.

The best option for him was going to be interest-only. At the same interest rate the monthly costs are going to be a much-more-palatable £3,330 a month, with a 1% lender’s fee.

Most importantly, we could find a mortgage for him that has no early repayment charges for the whole term of the loan.  Our client is planning to have it paid off by the sale of his Surrey home.

Buying the original home he went looking for fell through, so he went looking to buy equally enticing properties with his now much more manageable finance offer. 

UPDATE: In the time it took for our client to settle on an alternative West Country property he wanted to buy, his Surrey home was downvalued by £100K - as many prime rural properties have been, during continuing Brexit uncertainty. 

He was already at the maximum 75% LTV any lender would consider for a loan of this size (and a borrower of his age). To make up the £75K shortfall of  this kind of borrowing our client would have to liquidise some assets. 

We persuaded the lender to extend over their 75% LTV. The additional £75K is on a capital repayment basis, but the repayments are still very manageable. 

Jack Spillane

Finance Broker

Bristol

0117 959 5094

Is your situation similar to this? I specialise in helping clients who need creative development finance solutions, and second-charge mortgages. Give me a call any time and we can set up a detailed discussion of the finance you need.

Mathew Phillips

Finance Broker

Bristol

0117 959 5094

Are you in a similar situation? I specialise in bridging finance at Clifton Private Finance - I will find you the best funding solution for your property transaction.

Alex Chambers

Senior Finance Broker

Bristol

0117 403 4324

Are you in a similar situation? I am a specialist in residential and investment property finance for UK and international clients at Clifton Private Finance. Please don't hesitate to get in touch for a no-cost discussion of the finance you need.

Luther Yeates

Senior Finance Broker

Bristol

0117 244 5561

Are you looking for a similar type of property finance? I have extensive experience finding residential and investment property finance for UK and international clients. Please get in touch and we can arrange a time that's convenient for you to discuss your situation.

Sam ONeill

Senior Finance Broker

Bristol

0117 959 5094

Is your situation similar? I am a bridging finance specialist at Clifton. I can find a quick, cost-effective solution for the funding you're looking for.

Robert Gibb

Senior Finance Broker

Bristol

0117 959 5094

Are you looking for mortgage or short-term finance for residential or buy-to-let property (including HMOs)? I have extensive experience in finding property finance solutions for UK and international clients, both as individuals and limited companies. Please give me a call and let me see what I can do for you.

Adam Arnott

Associate Director

Bristol

0117 205 0214

Is your situation similar to this? I have extensive experience of advising clients who need creative property finance solutions. Please get in touch and we can arrange a time that suits you for a detailed discussion of your requirements.

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