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
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.
21st March 2017