Remortgage of family home on interest only terms to purchase son’s university accommodation

We were approached by a mother and father who were looking to purchase a flat for their son to live in whilst at university. They were hoping to purchase the flat outright so needed to raise £81,000.

To raise the funds they were planning to refinance their family home in Sheffield - a 4-bed detached house, currently mortgage-free.

The couple were keen to get an interest only term as they planned to sell the flat to repay the loan once their son had finished university.

Lenders are less comfortable with offering interest only terms on residential mortgages, but as the couple were purchasing a property that they could then use to repay the loan they were happy to assist.

The following terms were offered:

Property value: £500,000

Loan amount: £81,000

LTV: 16%

Rate: 2% 2 year fixed

Term: 14 years

Lender arrangement fee: Nil

Mortgage payment: £135 pcm

Consultant: Andy McOwat, 01625 416396