I recently managed to secure a million pound mortgage for a first time buyer on a new build property.
My client in this instance was a 37-year-old first time buyer. Up to this point he had always rented, and was now looking to buy a first family home; he had his eye on a new build in Fulham, valued at £1.2m, and had already put down a reservation fee. He came to us needing an 85% loan to value mortgage – and he needed it fast in order to hold the property.
On the face of it there were no problems with affordability. He worked as an equity researcher, and was on a basic salary of £160,000; on top of this, his bonus had consistently come in at around £180,000 over the last few years.
There were, however, several complications. Because of his lack of tangible assets at the age of 37, we couldn’t approach many private banks. The fact that the deposit for the property was gifted from his wife’s parents also didn’t help the situation, as many banks won’t accept this.
An additional hurdle was the fact that his wife didn’t work and was therefore classified as his financial dependant, which of course affects affordability.
Of all these complicating factors, the size of the loan to value was the most difficult element for me to negotiate. Most lenders will only go up to 70% on a new build, and my client needed 85%. To make things more complex, 85% of the £1.2m purchase price took the loan above £1m, which meant that we were severely limited in our options as only a few lenders are prepared to accommodate this higher gearing. There were a lot of inflexible restrictions to navigate as I tried to structure his loan.
Speed was of the essence in this case; we needed to secure him a mortgage before time ran out on his reservation.