I recently sourced a loan for a retired couple in their mid-seventies, who were looking to buy a very individual, new build property worth £1.3 million in Battersea. This property was actually 2 flats that my clients were looking to knock together. This created significant challenges for the lender, especially as the flats were still under construction.
My client approached me after trying both conventional and unconventional lenders with no success. Their circumstances made it clear that a standard application would be unacceptable to almost every lender, as they were so far out of the Mortgage Market Review’s affordability and maximum age benchmarks. It was undoubtedly a complicated case and unlike any I had dealt with before.
To add further complication, the lease on this property was a very unusual one, as it entitled the property developer to first refusal if they ever decided to sell. This means that the developer retains a vested interest in the lease on the property, so if it were to go back on the market the developer can immediately buy it back. Nearly every lender will refuse to work with this type of lease as it leads to significant complications in the unlikely event of repossession. The developer also keeps 20% of the uplift market value, which most lenders adjudge to affect their security, to the point of not being willing to lend.
Another big challenge was my clients’ personal income. Even though my client had a modest pension income, they had no other personal income, and despite owning a share portfolio of £1 million, they were already using that to support the income they did have.
Having forged a personal relation with an underwriter at a private bank new to Enness, I was able to place the loan with them. They were happy to accept my clients’ case by taking a view on their wider assets, which included the share portfolio, a background buy to let property and the value of the flats themselves.
Because of this, I was able to obtain the loan amount of £500,000 on an interest only basis for a 20 year term. This was an extremely pleasing outcome due to my clients’ age and low personal income and one that they were delighted with.