The clients: We were contacted by a local estate agent who had a client wanting to offer on a property. But only had 10% cash deposit due to not being able to sell there current flat. The clients were IT contractors so we needed to use the daily rate to achieve the highest level of borrowing. The property: The property was a freehold 5-bedroom house suited for a family, all standard construction. The finance: The clients were looking for a loan of 90% loan to value. They did not want to be tied in for long as they are looking to sell their flat. We needed a lender who would consider the day rate rather than net profit in order to achieve lending amount. – A 2-year mortgage (fixed or variable) – Interest only element to keep the payment affordable I needed to get this agreed on a case by case basis as there is no lender on the market which allows interest only at 90% loan to value. I made the client aware from the outset that even if I were to find a lender who would allow interest only. It would be a maximum of 50% due to not actually having a repayment vehicle other than sale of a property giving a net cash of £218,000. Usually, the lender would require a large pension or investment. This can redeem the interest only part on completion of the loan at retirement.The Application
Due to the complexity of the scenario, I needed to get this pre-agreed by a business development manager and a specialist lender. I managed to get a lender that agreed with the merits of the case and offered 50% interest only even though it would be very high risk for them. The same lender also offered a variable rate with no early exit fees, so allowing the client to re-finance to a high street bank at a lower loan to value once the background property is sold. Property value: £950,000 Loan amount: £855,000 LTV: 90% Rate: 4.01% 2 year Variable Term: 24 Years (until age 70) Lender facility fee: 1% (8,550 added to the loan) Lender exit fee: £0 Monthly payment: £3,208 Detail correct at the time of sourcing their deal. Ashley Slade
