£1.5 million mortgage at Bank of England Bank Rate plus 2.25% (2.75% payment rate, APR 3.1%* - the overall cost for comparison)

Proposition

Our client wished to purchase a new main residence in Berkshire for £1.37 million for which he required a total new mortgage facility of £1.5 million for the purchase, stamp duty and property improvements. He wished to retain two existing properties (one, the main property, worth £2.25 million, with a £600,000 tracker mortgage, and another worth £850,000, with no mortgage). The current main property will be let for £9,500 per month to private tenants and the £850,000 property is already let.

Client profile

The client is a company chairman in his fifties, with multiple income streams (salary, bonus, pension, dividend, rental, investment and private consultancy). He has very significant net assets for which he was able to provide good visibility.

Solution

Our first job was to move the existing £600,000 tracker mortgage to the new property. This avoided potential early repayment charges (ERCs) and ensured that the competitive base rate tracker deal continued. Then a special rate was negotiated with a private bank at 2.25% over base rate (meaning a payment rate of 2.75% and APR of 3.1%* - the overall cost for comparison) for the term of the £1.5 million loan, to be secured against the two existing properties (at a combined loan to value of under 50%).

Considering these houses were both to be let, the client was delighted with a pay rate of 2.75% with no ERCs to retain total flexibility. The mortgage interest could also be offset against the rental income for tax efficiency. As a 50% taxpayer it was highly advantageous to secure the larger loan against the let houses. The client agreed for the private bank to manage some existing equity investments which resulted in a lower rate being offered. The client will redeem both interest only loans in due course when he decides to sell part of an investment portfolio. With this solution he can time the share sales at a better moment in the stock market cycle.

Fees

The client paid an arrangement fee of £7,500 (0.5% of the £1.5 million loan amount).

 

*APR (the overall cost for comparison) calculation based on a 5 year term, interest only mortgage with £7,500 arrangement fee, legal and valuation fees of £5,000. The actual rate available will depend on your circumstances. Ask for a personalised illustration.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

© Private Finance Limited, 2019. Private Finance provides independent mortgage advice and arranges individual mortgage solutions for clients. Private Finance is a trading style of Private Finance Ltd, 29 Lincolns Inn Fields, London, WC2A 3EG, registered in England no. 3855776 and its Appointed Representatives. Private Finance Limited is authorised and regulated by the Financial Conduct Authority (FCA registration number 310566).

Private Finance Ltd is rated 4.94 stars by Reviews.co.uk based on 542 merchant reviews

4.94 / 5 Rating
542 Reviews
I would highly recommend Private Finance Ltd. Alex Weldon in particular helped us secure our first mortgage. He answered all our queries in record timing (usually within 15-30mins!) and nothing was ever too much trouble. Alex was always on the other end of the phone if needed and he made the process as smooth as possible.
Ed and Donovan are brilliant at what they do. I have used them many times now and each time they have been able to find me a great deal and handle all the complexities of my case. I would always recommend them to anyone.
Great and professional team, especially Elizabeth O'Connor, who guided me through the purchase, which was successfully completed! Highly recommended.
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