Residential loan to raise capital for elderly client

THE SCENARIO

I recently helped a 76-year-old client who needed a loan on her main residence so as to not default on a bridging charge already secured against the property.

My client came to me in quite the state of panic as a year before she had been ill-advised to take out a bridging loan against her main residence to complete refurbishment work. Had she originally taken out a normal mortgage, she would have found the costs much cheaper and avoided the predicament she now faced. The client was now at the end of her bridging term and had one month to complete on a new loan with me, otherwise she would default on her bridging loan payment.

The bridging loan was originally taken out on her main London residence worth £2million to raise capital to refurbish a second home. In order to meet her bridging loan payments, my client needed to raise a total of £550,000 on her new mortgage. If she could not secure a new loan quickly and efficiently, it was apparent she would have to sell her property to cover the cost as she could not remortgage.

There were two main issues with this case; the first being my client’s age, as most lenders will normally only lend up to around the age of 70-75, and the second being all her income was from rental property. Typically, lenders tend not to accept rental income as a valid asset to secure a loan. In addition, my client also needed a high income multiple to achieve the loan she needed, which proved a lot higher than any high-street lenders would be willing to lend.

OUR SOLUTION

I have a very good relationship with a building society who take a very bespoke view to cases which require a high income multiple. My influence and prior dealings enabled me to negotiate a situation where the lender took a view on her overall wealth, with the proviso that if she defaulted on her payment, she would sell an untenanted property to repay the debt.

The product secured was a 15-year term interest only loan, which would keep monthly payments and allow my client to maintain her lifestyle. This was offered at a rate of 2.79%, a rate which my client gladly accepted and was extremely happy with.

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