A young professional who works in private equity came to me who was seeking an interest only mortgage using bonus income. He was 28 and was looking to purchase a property for £1.5 million in South West London – £975,000 of which he wanted to borrow.
His base salary was £100,000, however, the majority of his income came in the form of bonuses. For example, in 2014, he received an additional £125,000. Usually when a client generates a lot of income from bonuses which are not guaranteed we are able to persuade banks to consider them if there is a continuous history of receiving those bonuses.
However, my client’s circumstances were more complex as he moved job the year before, albeit within the same industry. In order to secure an interest only mortgage using bonus income it was essential that the bank would consider the bonuses my client had previously been awarded by other employers. The problem was that most banks will not do this if you have moved company…
Aside from an interest only mortgage using bonus income my client’s other preference was for low regular payments but with the flexibility to then use his bonuses to make large lump sum overpayments. This would ideally be an interest only mortgage which didn’t carry penalties for making the large overpayments he wanted.
Due to these complexities our realistic chances of sourcing an interest only mortgage using bonus income were quite slim. However, on our side we did have the fact the client is a young professional and on an upwards trajectory in his career. Typically banks are willing to make concessions for promising individuals so that they can forge a relationship for the future.
With this in mind, I approached a specialist bank who I thought could be convinced to negotiate a bespoke pricing and structure for this client. I painted a full picture of my client’s career in private equity, alongside exploring his wider financial interests and background. I demonstrated why he needed an interest only mortgage based using bonus income and proved his ability to pay the loan back in overpayments over the years as his bonuses and earnings increase.
This strategy was a success. We secured a rate of 3.54% and the client was delighted to proceed.