- Client: British nationals and residents
- Property value: £925k
- Loan amount: £600k
- LTV: 64.8%
- Rate: 2.25%
We were approached by a British couple who had the opportunity to purchase the flat directly below their existing home. Their intention was to combine the two properties and create a single, larger residence.
While this type of arrangement can appear relatively straightforward, the proposed ownership and lending structure presented a challenge. The clients wanted the mortgage to be secured against the freehold, while the borrowing was to be based on the value of just one of the two units. Only a small number of lenders are comfortable with this structure without requiring bridging finance or development funding.
Enness identified a lender prepared to take a more pragmatic approach. Rather than requiring the clients to use short-term finance, we secured a regular mortgage of £600k against the £925k property value, representing 64.8% LTV.
The lender included a £10,000 retention as a condition of the mortgage, providing confirmation that the clients would proceed with the planned works to convert the two flats into a single residential dwelling.
The solution allowed the clients to move forward with their plans using conventional mortgage finance rather than a more expensive short-term facility. It also demonstrates the importance of finding a lender comfortable with the specific legal and structural arrangements surrounding a property.
Enness has experience arranging complex mortgage solutions where standard lending criteria do not readily accommodate the circumstances. The right lender and structure will depend on the properties involved, the proposed works and the borrower’s individual circumstances.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, valuation, due diligence and lender criteria. The terms described relate to a historical transaction and are not indicative of current or future pricing.
Risk Warning:
Taking out a mortgage involves financial risk. If you do not keep up repayments, your property may be at risk of repossession. Borrowers should consider the affordability of any finance and the implications of the proposed property works before proceeding.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
