Million pound mortgage with bonus income

THE SCENARIO

I recently arranged a mortgage for a client from a large banking institute. The client was actually referred to me by the bank’s in-house mortgage broker as he was unable to arrange a suitable mortgage.

He approached me as he wanted to re-mortgage his primary residence and family house in Fulham. The property was valued at £3 million and he wanted a loan of £1.4 million against it. He was keen to secure a five year fixed rate mortgage for stability.

Much of the client’s income was made up by a substantial annual cash bonus which we were able to see a strong history of the client receiving. Therefore, he needed a million pound mortgage with bonus income factored in – something banks are not always comfortable with doing.

Although the client had a substantial income his children’s boarding school fees were a significant outgoing at £70,000 per annum. This outgoing meant he failed to meet the affordability criteria a number of banks specified.

After consulting with my client, I decided that approaching a private bank would not be the best route to take in this specific case. Although my client would be an eligible client for a private bank to form a relationship with, they would want to consider his assets from overseas which was not something he wanted.

OUR SOLUTION

Therefore, we decided to approach a high street lender with whom I have a relationship, and they were able to shift the boundaries of their usual criteria guidelines (considering his outgoings) and utilise his cash savings and investments. More importantly, they agreed to use 50% of the client’s cash bonus which is something they rarely do. They offered my client a five year fixed rate mortgage at 3.09 %. We managed to get this mortgage agreed very quickly which my client was delighted with – they have already referred one of their friends to me too!

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