Remortgage and equity release

PARTNER

Michael Frimpong

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A previous client recently approached me in order to raise capital to fund some home improvements. His current mortgage product was about to expire so it was the ideal time to remortgage and equity release.

The property in question was a £1.5million home set within 40 acres of land in Totnes, a market town in Devon within an Area of Outstanding Natural Beauty. My client was looking to complete substantial work and wished to secure a 75% interest-only mortgage to do so, using the sale of the property as the repayment strategy.

My client was the majority owner of a public limited company (PLC) and, as such, his liquidity was largely held within the company, as well as his property. This apparent illiquidity presents a challenge for some lenders who prefer to see a reliable income stream as security for a loan, particularly when requesting an interest-only facility.

A further obstacle arose in encouraging a lender to take the Grade II listed building and its substantial land as security. Read more about land bridging finance. However, I was able to work with the lender to reassure them of the value and desirability of the property as an asset, as well as his alternative assets within the PLC. This gave my client two options for repaying the loan if required; the sale of the mortgaged property or sale of shares in the PLC.

Furthermore, I provided a lengthy explanation of the works involved, supporting the case that the value of the asset would appreciate once the additional funds were invested in the property.

OUR SOLUTION

As a result of our extensive network of lenders, I knew which lender to approach with this case and it was my strong relationships with senior members at the bank which allowed me to source competitive terms. The result was a 17-year mortgage at a rate of 1.89% fixed for two years, with 75% of the loan being payable on an interest-only basis.