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.
I approached a private bank who were understanding of my client’s circumstances and were willing to give him the high value let to buy mortgage he required. I suggested that his private accountant wrote a letter to confirm his finances which bolstered the process.
Furthermore, the private bank that I chose did not require any assets under management which a lot of banks do. They leant my client £2 million at a rate of 2.49% and I managed to persuade them to offer residential rather than buy to let rates, (due to the fact the client may not rent it immediately) which is extremely rare. This was offered on a fixed basis for 2 years and the lender’s arrangement fee was 0.25%. My client was delighted with this high value let to buy mortgage solution.