Clients Purchase Dream Home Without Selling Current Main Residence

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Proposition

Having stumbled upon their dream home – a grade II listed thatched cottage in the Suffolk countryside – our clients came to us looking for a way to finance the purchase of this property quickly, before it could be plucked from the market by another buyer. Ultimately, they planned to fund the purchase of the property using the cash they would generate from the sale of their main residence; however, they recognised that the sale of this property could take time, and they were eager not to let this once-in-a-lifetime property slip through their fingers.

Our clients therefore had two requirements: firstly, they needed the finance to be raised quickly; and, secondly, they needed the finance to be flexible so that they could repay the loan as soon as they’d sold their main residence.

Solution

Having expressed their preferences and talked through their options with one of Private Finance’s consultants, our clients eventually opted to take out a buy-to-let (BTL) mortgage on their target property. They then planned to rent this property out until they were able to sell their existing property, at which time they would pay off the BTL mortgage and move into their new home. This course of action, however, presented a difficulty, because the property they were looking to purchase had been valued at £585,000, but they were only able to secure a BTL loan of £285,000 due to the limited amount of rental income that the property was able to generate. Our clients had £160,000 set aside in a savings account, but even with these funds taken into account, they were still £140,000 short of the £585,000 they required.

At the time, our clients held a mortgage worth £40,000 on their main residence. We therefore approached their existing lender with the hope of securing a second charge mortgage on this property. Their lender, however, was unwilling to accept this arrangement, so we began exploring other options.

The solution we eventually arrived at involved arranging a bridging loan that would allow our clients to pay off their existing mortgage and provide them with the additional funds they would need in order to purchase their target property. Moreover, our clients expressed a preference for a loan with rolled up interest payments and a 12-month term; such a repayment option would allow them to keep their monthly mortgage payments down and provide them with what they considered to be a reasonable amount of time to sell their main residence.

Lending Facility

We were able to secure our clients a variable rate buy-to-let mortgage worth £286,000 with a rate starting at 2.49%. Most importantly, this loan came with no early repayment charges, meaning that our clients were free to repay the loan at any time without incurring any additional charges. The second loan we were able to arrange was a twelve-month bridging loan worth £180,000 to be paid back on a rolled-up, interest-only basis at a rate of 0.48% per month. Ultimately, these loans provided our clients with the funds they needed, and they were able to purchase their dream home.

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 4.95 stars by Reviews.co.uk based on 731 merchant reviews

4.95 / 5 Rating
731 Reviews
I didn't expect Conor at Private Finance to be able to find a mortgage solution for my circumstances. I was wrong. I now have a mortgage exactly suited to my needs. Suffice to say I am very pleased with the service provided by Private Finance and Conor in particular. I would have no hesitation in recommending their services to others.
Fantastic service, Simon sorted me out with exactly what I wanted and at a better interest rate than I could get else where. Would recommend their service to anyone. Hopefully I get the chance to use this company again. Thank you
The service from Donovan was excellent. As we came into this as first time buyers, Donovan put us at ease at all times, was very responsive and and provided ample advice. He was a calming influence on the whole house buying process. The service was silky smooth from start to finish! I would not hesitate to recommend Donovan and Private Finance.
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