Many wealthy older borrowers are unfairly disadvantaged when it comes to property financing, despite many having a great deal of wealth held in various assets. I recently assisted such a client, who owned a £10million house in a desirable London location and required a second charge.
My client already had a mortgage with a retail bank, at a favourable rate. However, he wanted to borrow an additional £1.5million in order to carry out renovations to his home before selling it. Unfortunately, he was struggling to find a borrower prepared to offer him a mortgage at a low rate.
As an older borrower, my client was retired and was not able to show a level of income which would support borrowing at the level he required. Sadly, the options are often limited for older borrowers, as many lenders have tick box criteria which can immediately prevent such clients from taking out a loan with them.
This was frustrating, as the property in question was an excellent asset, and my client was very confident he would be able to sell the asset to repay the loan. He expected the property to increase in value significantly after his planned refurbishments, with a predicted sale price of £13.5million.
I therefore suggested he take out a second charge against the property, as opposed to trying to refinance altogether and losing his currently favourable rate. This would enable him to borrow the additional funds needed, renovate the property, and sell for a profit.
Using my knowledge of the market, I approached a flexible lender who takes a holistic attitude towards their client’s cases. They were happy to take a view on the client, in light of the fact my client had plenty of equity of the property and everything was likely to proceed as expected. I was able to negotiate for a second charge at a rate of 8.49%. This interest would be rolled up, meaning my client could pay the loan and the interest back in their entirety after the sale of the property—an excellent result for such a client.