As part of our ongoing mortgage management service, we were asked to conduct a market review of the options for an existing couple. They are both in their mid-30s with demanding high-pressure jobs. The couple has no children and earn large basic salaries with significant monthly bonuses.
They had purchased a sizeable property 2 years earlier and had secured additional funding to enable them to make substantial improvements to the property since their original acquisition. They were seeking to consolidate this additional funding back into a single facility.
The clients had indicated that as well as securing the best terms available they also wanted the flexibility to adjust their monthly mortgage costs should they decided to seek quieter less pressurised work roles. They also wanted the ability to cope on a single salary for a few years should they decide to start a family.
If we could secure the client’s mortgage facility on a “part & part” basis then this would give the couple much more flexibility with regards future mortgage payments. As a result, we investigated securing a mortgage facility of £800,000 against a property valuation of £1.3m with the aim of reducing the current cost and providing flexibility moving forward.
By adopting a “part & part” approach we positioned £500K of the mortgage on an “interest only” basis and the remaining £300K was on a traditional repayment basis. This combination approach meant that their “contractual” monthly payment was only £1800, as opposed to £3,200 pm it would be if it had been established on a pure repayment basis.
As the facility has an overpayment allowance of 10% per year it meant that the clients were able to make overpayments to bring their notional monthly cost back up to the £3,200pm level. This extra monthly payment will be used to bring down the balance on the interest only element of the facility whilst they are both in a position to do so.
Should their circumstances change, and their combined incomes drop they then have the flexibility to drop down to the lower contractual monthly payment without any issues or approval by the lender. This solution proved to be an ideal fit for this couple’s requirements.
“We secured the part & part mortgage deal within the client’s timescales and on a better rate than their current facility.”
We secured the part & part mortgage deal within the client’s timescales and on a better rate than their current facility. The clients were delighted with the results of our mortgage management service and we look forward to working with them again in the future.
