Not too long ago, I was contacted by a first-time buyer couple who were looking to purchase a home together; a lovely terraced house in north London for £1.6 million using a substantial interest-only loan of £800,000.
The couple themselves had a limited wealth portfolio. One person was on a limited fixed income while the other had recently set up their own business and thus, had no viable income documentation that could support their loan application. As a result, the maximum loan we could achieve was nowhere near what my clients desired, so we were forced to look into other solutions.
As the mortgage was unable to be secured on their incomes alone, I needed to find an alternative solution. I started by exploring the couples wider family and support system. Luckily, one of their immediate family members was a high net worth individual and, although had no direct income source, had an investment and share portfolio worth over £30 million which more than enough to support the couple when it came to the borrowing needed.
Considering all options, the most suitable mortgage option for the couple was a ‘joint borrower, sole proprietor’ setup. This meant that the client’s family member couple support the mortgage without being a registered owner of the property at the land registry. In the future, this means the couple will have the option to remortgage and remove the father off the loan when it becomes affordable enough for them to repay on their own. Due to the family member being in their sixties, I was also able to secure an extended term as the mortgage was supported by their large investment portfolio.
Although this was not a normal case for our chosen lender, our fantastic relationship with the underwriter meant that they took a common-sense approach towards our clients’ circumstances. In progressing the loan with this lender, we were able to secure a brilliant rate of 1.6% for our clients. Our clients were beyond thrilled with our service and were over the moon to have secured their dream property with a large interest-only loan, despite the complexity of their case.
Large Interest Only Mortgages