When they came to us, our clients owned two encumbered properties – their main residence and an investment property – and were looking to purchase a new residential property valued at £840K. In order to raise capital for a deposit, they hoped to remortgage both of these properties onto buy-to-let mortgages with higher loan-to-values (LTV’s).
This case presented a number of difficulties:
- Two of the properties – the let-to-buy and the new residential property they were looking to purchase – had annexes with kitchens. Few mainstream lenders are happy to lend on such properties.
- Our clients planned to sell their original investment property within the next two- to five-years. They therefore required a BTL mortgage with no Early Repayment Charges (ERC’s) within this time period.
- We also needed to make sure that the lenders providing the mortgages on the existing two properties were happy with some of the raised capital being put down as a deposit for the new residential property.
With access to every lender on the market and strong working relationships with a huge range of building societies and banks, Private Finance’s brokers are equipped to find financial solutions to even the most challenging of problems. On this occasion, despite the difficulties mentioned above, our broker was able to locate a number of products that met all of our clients’ requirements.
First, we were able to arrange a 5-year fixed interest-only remortgage worth £137,000 on our clients’ existing BTL with an LTV of 75%. This remortgage came with a rate of 2.55% and no ERC’s between the second and fifth year, thus satisfying our clients’ request for flexibility. We were then able to remortgage our clients’ previous main residence onto a two-year buy-to-let discount rate mortgage worth £350,000, starting at 3.25%. This was also on an interest-only repayment strategy.
Using the capital raised from these remortgages as a deposit of £210,000, our clients were then able to secure a five-year fixed residential mortgage worth £630,000 with a rate of 1.44%. £420,000 of this was to be repaid on an interest-only basis; the remaining £210,000 was to be repaid on a capital-repayment basis.