Pre-credit crunch, interest only-tracker extended & ported with additional borrowing on 10 year fix

Pre-credit crunch, interest only-tracker extended & ported with additional borrowing on 10 year fix

21.03.17 | Written by: Beckie Pepperrell

We were approached by a married couple who were looking to buy a larger house. In particular, they wanted us to find out if their existing lender would allow them to:

  • Transfer their existing, interest only, term tracker mortgage onto the new property (known as porting)

  • Extend the mortgage term which had just eight years left to run

  • Borrow an additional £279,250 – almost double their existing outstanding loan

The couple had been into the bank themselves and asked these questions but had been given a firm no but the husband, being a mortgage broker himself, knew it might be possible with the help of an intermediary – so got in touch with us!

To add another layer complexity, the husband’s income includes fluctuating amounts of commission.

We approached the clients’ existing lender to negotiate terms. After considerable to-ing and fro-ing we were able to get the bank to agree to:

  • Port the existing mortgage rate over to the new property: Bank Rate + 0.59%, i.e. 0.84% – a truly impressive rate compared to current trackers, which are all at least 2% over base

  • Extend the mortgage term from eight to 22 years

  • Lend the additional £279,250 on a 10-year fixed rate. 

The bank also agreed to provide up to 50% of the property’s value on interest-only terms, ensuring low monthly payments, with the remainder of the loan on a repayment basis.

The clients intended to sell the property at the end of the term and downsize, allowing them to repay the remainder of the loan and buy a smaller property for cash.

Despite the in-depth negotiation the lender issued a formal offer within a couple of weeks of us submitting the application. 

Here are the details:

Property value: £759,000

Loan amount: £569,250

LTV: 75%

Rate: Ported: Bank Rate + 0.59% loan term tracker plus top up loan on 10 year fixed at 2.89%

Term: 22 years, part and part, i.e. £190,749 repayment and £378,501 interest only

Mortgage payment:  £1,376 pcm

Lender arrangement fee: £999 for top up loan. Port facility free of charge.

ConsultantBeckie Pepperrell, 01732 471602

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.