85% Interest Only Mortgage Solution

THE SCENARIO

One of my clients was looking to move to Embankment and needed an 85% interest only mortgage solution. She and her husband had decided to keep their current residence, valued at £1.5 million and let it out for investment purposes. The client had found a suitable new property and had an offer accepted at £1.6 million.

The bulk of her capital was tied up in property – she owned five high value buy to let properties over London. Consequently, she needed to borrow 85% of the purchase price which worked out at £1.36 million. To further complicate the situation she had a strong preference for an interest-only million pound mortgage solution.

Interest only options are a viable product for people whose income is made up of large bonuses or commissions. It’s sensible for those who plan to live in their property for a short time and for those who have other assess which will cover the mortgage debt. Many of our clients request interest only at the outset of our conversations when we will explain their availability, discuss other options and make sure they are aware of the risks.

As she was a banker her salary was largely determined by bonus income so I had to keep this in mind when I was negotiating this large mortgage on her behalf.

OUR SOLUTION

I’ve worked with one particular specialist lender for a number of years that I thought would be willing to make concessions for this client. I was right in that I ultimately managed to secure an 85% interest only mortgage on a variable rate with no early repayment penalties over a term of 20 years. I secured this at such a high loan to value by using the equity in her property portfolio as leverage to make the lender comfortable with the interest-only lending. I also managed to use my client’s basic salary, plus half of her bonus income, to achieve this large mortgage. My client was really happy with this solution as an 85% interest only mortgage solution is particularly rare over £1 million!