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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: Pete Coombes

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.

Consultant: Pete Coombes01732 471 688

 

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

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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