Requirement

Our clients had recently spent a significant amount renovating their home and wanted to unlock capital to repay unsecured borrowings and replenish savings. Not pleased with what their current lender could offer, we were tasked with bettering the rate and the amount of loan that could be arranged as interest only to fit with their budget.

For the borrowing amount to be possible, we would need a significant portion of the client’s discretionary bonus and commission income to be included as part of any affordability assessment.

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Solution

We shortlisted and approached several lenders and found our home with a lender we have an established relationship with. Working with an underwriter, we were able to demonstrate a track record of receiving similar levels of bonus and commission over an extended period; enough for the underwriter to feel comfortable to use a higher portion of these incomes enabling the loan to be viewed affordable.

With the property valued at £1.15m and a loan requirement of £900k, most lenders deem the amount of equity too low for interest only lending and the loan to value 'LTV' at 78% as too high. With this lender we were able to arrange £850k of the total £900k loan as interest only and all at an improved rate, saving hundreds per month versus their existing lender.

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Post Script

Whilst interest only mortgages have their place in the market, it's crucial to explore and consider all options with your mortgage consultant to ensure you make the right financial choice.