Additional borrowing to purchase new property and avoid early repayment charges

THE SCENARIO

I recently helped a couple who were moving to a new main residence in South East London that was worth £570,000. My clients were in need of a loan of £322,000 for the new property, however, they were already tied in with their existing lender and faced a very expensive penalty charge.

Generally, fixed products will come with an early repayment charge if you are to remortgage or change products before the fixed term is up, which can end up being very expensive. Despite this, most mortgages are portable, which means that when you move house, instead of paying off your old mortgage, paying a penalty and taking out a new one, you should be able to just take the mortgage with you to the new property.

However, my clients were upsizing and buying a bigger house, so required more borrowing as a top up. A top up can only be done using the same bank, otherwise it will result in two separate charges against the property, which generally no lender would do on a residential purchase.

In order to get around this, I managed to ensure the new additional borrowing was arranged to tie in with my client’s existing lender and arranged a port to the new property with a top up, so my clients could avoid the penalty. I was also able to amend the loan term with the new borrowing, ensuring monthly payments would be much more affordable for my clients moving forward.

This effectively resulted in two chunks of lending on different rates yet with the same lender, resulting in a blended overall rate. I was able to secure this at a very affordable 2.03%. This proved an excellent outcome for my client’s, so they could carry their mortgage, purchase a bigger property and avoid any early repayment charges.

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