My client in this instance was a banker, working in the City. He owned a property in Hampshire, valued at £2m, where he lived with his wife, and was looking to buy a pied à terre in London to use mid-week. He wanted to raise £1m on his current property with which to finance the new purchase.
The first challenge for me was that he had actually been out of the City for the past few years; he had taken an extended sabbatical from work. Although he had now returned to his previous job, his income would have to be carefully explained to the lender.
At the time of application, my client hadn’t actually settled on a property to buy yet; he wanted the finance in place before beginning his search in earnest. I therefore needed to find a lender who didn’t require a simultaneous purchase. Of course, he did not want to pay interest on the funds until he needed to use them.
At this point, there was something of a curveball; the Hampshire property was down-valued from £2m to £1.7m. I therefore had to come up with an effective way of restructuring the loan. A mortgage at 50% loan to value (LTV) on an interest only basis amounted to £850,000, and I arranged a further £150,000 on a repayment basis so as to ensure the loan still came to a total of £1m.
I found a lender who was happy to proceed despite his income irregularities, and would release the funds despite my client not having a property in mind. The offset product I secured meant he was able to put the money into a linked account, paying no interest until he needed to use it.
My client was thus able to complete on the £1m loan, which was fixed at 1.99% above the Bank of England base rate for the term of the mortgage – meaning an initial rate of 2.49%. This was an excellent result for my client, and he was delighted.