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Interest only refinance of mixed use property for owner-occupiers

We were approached by a broker whose clients are a married couple who were looking to refinance their live-work property located in a popular Cheshire town.

The building has three floors. On the ground floor is a shop from which they have run a fine food and wine merchants for 30 years. Above it is their living accommodation.

The couple needed to remortgage because their existing private finance provider required repayment.

They wanted a deal that would be similar to their existing loan terms – a rate of around 4% on an interest only basis.

The interest-only part was a challenge for us because many lenders prefer capital and interest repayments on commercial mortgages.

Also, more than 40% of the property is designated residential which can be tricky to fund.

However, we approached a building society which specialises in the more unusual commercial deals and after some negotiation the following terms were offered.

Property value: £730,000

Loan amount: £430,000

LTV: 59%

Rate: 4.49% term tracker

Term: 5 years interest only

Borrower: Joint personal application

Mortgage payment: £1,609 pcm

Lender arrangement fee: 1.5% (£6,450)

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

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