Complex Mortgage for £3 Million Property

PARTNER

Chris Lloyd

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Key Facts: 

• Residential property in Guildford 
• Property Value: £3,360,000
• Loan Amount: £2,251,200
• LTV: 67%
• Rate: 3.5% plus BOE base rate (currently 0.1%)

We were recently approached by a client looking to buy a property in Guildford for £3,360,000. The challenge here was that the property was split into 3 separate titles. This is because there was a semi-commercial element.

The breakdown was as follows:

• £1.55m residential security – Main house and surrounding gardens where the client planned to reside with his family (all on one title)
• £1.81m commercial – 3x warehouses that were let to a Christmas decorations business, including some commercial land (split onto 2 titles)

Although the client had a healthy income, given the majority of the security was commercial and split into separate titles, most residential lenders couldn’t lend.

We also looked at the possibility of completing a residential mortgage with a standard lender secured solely on the home and then a commercial loan secured on the commercial titles. The hefty commercial loan interest rates and lender fees were, however, not acceptable to the client.

Through the strength of our relationship with a private bank, we managed to negotiate a competitive blended semi-residential/commercial rate. The bank was able to lend one loan across all titles which were a lot more straightforward. 

The mortgage also had no early repayment charges which suited the client as he had some large bonuses projected, which he planned on using to pay down the loan in the next few years.

The interest rate was just 3.5% plus BOE base rate (currently 0.1%) and the loan to value was 67% loan to value, which was outside the banks usual maximum loan to value. The loan was also full interest only, which sat in line with the client's preference.