THE SCENARIO
Enness was approached by a couple looking to purchase a family home in the countryside. The property was a Grade II listed residence valued at £2 million. One of the borrowers worked in banking, with annual remuneration consisting of a combination of salary and bonuses.
The couple wanted to structure the mortgage on a fully interest-only basis to preserve liquidity for other commitments. However, this type of arrangement requires a suitable repayment strategy, particularly where the borrowing is secured against a residential property.
The clients intended to remain in the property while their children were growing up, with the longer-term plan to downsize once they had left home. The challenge was finding a lender comfortable with this proposed exit while also meeting the clients’ preference for an interest-only structure.
OUR SOLUTION
Enness presented the clients’ wider financial position to a lender, demonstrating that they had sufficient resources to support the borrowing. The proposed downsizing strategy was also explained as part of the overall repayment plan, giving the lender a clearer understanding of how the facility could ultimately be repaid.
While some lenders may require part of a residential mortgage to be repaid on a capital and interest basis, Enness identified a lender willing to consider the circumstances and structure the borrowing differently.
The lender agreed to provide the full mortgage on an interest-only basis, with a five-year fixed-rate period. This allowed the couple to maintain greater monthly liquidity while retaining a clear longer-term strategy for repaying the borrowing.
This case demonstrates how a detailed assessment of a borrower’s wider financial position and proposed repayment strategy can help when arranging specialist residential finance. Where standard mortgage structures do not align with a client’s objectives, access to lenders with more flexible criteria can create alternative options.
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.
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.
