A client recently approached me who required a high value let to buy mortgage – meaning that he wanted to raise money on his current property in order to enable him to buy a new one in the country which would become his primary residence. His current property was in Chelsea and valued at £4 million.
He had a relatively low mortgage of only £400,000 but had decided that rather than selling it he would like to keep the property for investment purposes as property values in London continue to rise and will be a great asset long term. In this case a high value let to buy mortgage was definitely a good route for him to take. The new house that my client wanted to purchase was in Leicestershire and was valued at just over £2 million. Consequently, my client needed to borrow £2 million.
The problem was that although my client was the CEO of a vastly successful company, he chose to reinvest the majority of the profit back into the company and paid his salary in dividends – earning approximately £340,000 per year. Although this was to be increased by the rental income by approximately £100,000 – £120,000 it still meant that we had to rule out the high street banks which have a typical loan income multiple of four times salary as he would need to earn £500,000 per year to sustain this high value let to buy mortgage.