Our client wished to purchase a country property for £1.9 million and needed to exchange in 3 weeks to secure the deal. He wanted to borrow 100% of the purchase price, plus costs, so around £2 million in total. His income was £750,000, with a base salary of £150,000, the rest being bonus. The client had a house in London, with no mortgage on it, valued at £1.2 million, which he did not wish to sell.
Aged 39, married with 3 children, his plan was to live in London during the week and in the country at weekends. He had a £1 million investment portfolio of shares and other assets and wished to pay the mortgage off quickly with bonuses and investment returns.
Solution & Fees
After considering his options, we arranged an interest only remortgage for 3 years on our client’s current property for £720,000 – 60% of its value. We negotiated a rate of 1.69% over Bank of England Bank Rate, giving a payment rate of 2.19% (APR1 2.6%* - the overall cost for comparison). There were no Early Repayment Charges, and the remortgage costs were paid by the lender. The client paid a £1,499 arrangement fee on this mortgage.
To make up the total of £2 million that our client wished to borrow, we also arranged an interest only mortgage for 3 years on the new property; £1.28 million at nearly 70% of the £1.9 million purchase price. The rate was 2.09% over Bank of England Bank Rate giving a payment rate of 2.59% (APR2 3.4%** - the overall cost for comparison). Again, there were no Early Repayment Charges. The client paid a 0.3% arrangement fee (£3,840) on this mortgage.
*APR1 (the overall cost for comparison) calculation based on a 3 year term, interest only mortgage with £1,499 arrangement fee, legal and valuation fees of £3,000. The actual rate available will depend on your circumstances. Ask for a personalised illustration.
**APR2 (the overall cost for comparison) calculation based on a 3 year term, interest only mortgage with £3,840 arrangement fee, legal and valuation fees of £5,000. The actual rate available will depend on your circumstances. Ask for a personalised illustration.