£1.35m mortgage to secure a second home in Scotland for £1.8m (75%)
1.53% Interest Rate
Structured on a part Interest Only, Part Repayment Basis
Our client is a Chief Operating Officer of an investment firm. His last two years P60s show an income in excess of £1m but his basic salary was ‘only’ £140,000. This meant, when applying for mortgage borrowing directly, his bonus income was getting capped at the basic level by his bank. On top of which was applied a massive a reduction on how much bonus he could use to assess affordability because of Covid. He had been trying to get the mortgage through with bank for nearly two months, but they kept changing lending criteria.
What was needed
While our client has a very strong income, buying a second home still remains problematic for some lenders, especially because of the way in which they have tightened their criteria post Covid. If you then layer that on top of the structure of the client’s income that does severely restrict your choice in which lenders can be approached. That said, being such a strong case, there is no way our client should have been having the problems he had.
What was the challenge
Many lenders put restrictions in place if a bonus exceeds the base salary, so often the amount of bonus over the salary is ignored. In this instance, even though the client received a bonus of circa £850k, only £150k of that was considered when the lender came to assess how much can be borrowed. Also, some lenders are not taking any bonus income into account at the moment! However, that isn’t the case with all lenders, so we needed to look further afield for a more suitable lender than simply relying on his bank.
How we provided the solution
Mike Brooker, Associate Director, took on the client’s case when, after a referral, the client looked up Mike online and booked himself into Mike’s diary via our online booking system at a convenient time to speak. They discussed the client’s difficulties in obtaining a mortgage for a second home, which perplexed Mike, as the client clearly had sufficient income to support the loan. Mike ascertained what the client’s mortgage gaols were, what was needed, and which lenders to talk to. In a few days he had the lending agreed and survey booked in, which is more than his bank had been able to do in 2 months!
What was the rate:
1.53% – 2-year fixed rate