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Case Profile
Our clients had bought a new main residence for £2.3million which they wanted to renovate. They planned to install new bathrooms, underfloor heating, a new kitchen and build an extension on the first floor. With this exciting project in mind they had successfully applied for planning permission, but still required funding.
In order to fund the renovation they wanted a remortgage against the property for up to £700,000, while using £200,000 in savings to fund the balance of the works. They ideally required a low variable rate product with no Early Repayment Charges, as they intended to repay the loan within 2 years through bonus and dividend payments.
However, when they approached high street lenders to arrange the remortgage they were turned down. The property was not deemed to be habitable, as the interiors had been entirely stripped and had neither a functioning bathroom, nor a functioning kitchen.
They, instead, received quotes for development finance products with pay rates ranging between 4% – 6% with a 1% arrangement fee and a 2 year tie-in. These were too expensive and they did not want to be tied in on a high pay rate for that period of time.
Solution
Through our excellent range of contacts with private banks, we were able to find a lender who would offer the clients a remortgage instead of development finance. We put together a case on behalf of the clients explaining how their future bonuses and dividends could be used as a repayment vehicle.
We approached a lender who offered them a £700,000 interest only mortgage at a favourable rate with no Early Repayment Charges. The clients were delighted with the offer and were happy to proceed, allowing them to get underway with the renovations to their new home.
Deal Highlights
| Loan amount: | £700,000 |
| Rate: | A variable rate, currently 2.75% for the first 24 months. Reverts to the bank’s standard variable rate, currently 4.50%, for the remaining term of the mortgage. |
| LTV: | 35% |
| APR: | Overall cost for comparison 4.4% APR representative variable |
| Term: | 15 years |
| Type: | Interest only |
| Loan purpose: | Residential remortgage |
| Lender’s arrangement fee: | 1.25% of the loan amount |
| Early repayment charges: | None |
Notes
This case study is for information and illustration purposes only. It is not an offer, or suggestion of an offer. Each mortgage case is assessed on an individual basis and there is no guarantee that the solution described here can be repeated in the future.
Please note that this specific deal may not be available to – or suitable for – all customers, dependent on their individual circumstances. The rate quoted may become out of date at short notice and may not be available at the point at which customers enquire about it. This document may not contain all the information needed for customers to make a decision and they should seek advice.
Overall cost for comparison 4.4% APR representative variable based on 15 years at 2.75%. Lender’s arrangement fee is 1.25% of the loan amount. The actual rate available will depend on your circumstances. Ask for a personalised illustration.
largemortgageloans.com is a trading name of largemortgageloans.com Ltd. A fee of up to 1.17% of the mortgage amount is payable, of this 25% is payable on application and the remainder on completion, e.g. on a mortgage of £1,000,000 the fee would be £11,700 of which £2,925 would be payable on application. The precise amount will depend on your circumstances.
Your home or property may be repossessed if you do not keep up the repayments on your mortgage.
