Flexibility can be just as important as securing a competitive mortgage when a client expects their circumstances to change. I recently assisted a married couple who were looking for a remortgage with no early repayment charges (ERCs), as they were considering moving to a larger property within the following year.
The couple owned a property valued at £1.5 million and wanted to refinance an existing mortgage of £860,000. Their current mortgage had reverted to the lender’s Standard Variable Rate (SVR), increasing the cost of their monthly payments.
However, simply securing a new fixed-term mortgage was not suitable for their circumstances. The clients were considering purchasing a more expensive home in the near future and therefore needed the freedom to repay the mortgage without facing a significant early repayment charge if they decided to move.
They had also approached another broker previously, but the recommendations they received had proved unsuitable. They therefore wanted a more considered approach that took their immediate requirements and their plans for the future into account.
OUR SOLUTION
I reviewed the clients’ wider financial circumstances and approached a leading private bank that was able to take a holistic view of their position. Rather than simply arranging a mortgage for their current property, I explored whether the lender could provide a structure that would also accommodate their potential future move.
The lender was able to offer a flexible tracker mortgage with no early repayment charges, giving the clients the freedom to repay the facility should they proceed with their planned move to a more expensive property.
This provided the flexibility the clients were looking for while allowing them to refinance away from their existing SVR. It also meant they could make decisions about their next property without being tied into a mortgage structure that could create additional costs if their plans changed.
The case highlights why specialist remortgage expertise can be valuable when a borrower’s requirements extend beyond simply finding a new rate. Understanding a client’s wider plans can help identify a mortgage structure that provides the appropriate balance of cost and flexibility, subject to lender criteria.
When arranging a mortgage, borrowers should also consider whether appropriate insurance protection is relevant to their circumstances. The type and level of cover required will depend on factors including income, financial commitments and personal 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, underwriting, affordability, property suitability and lender criteria. Terms, rates, LTVs and availability may vary depending on individual circumstances.
Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise.
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.
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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.
