Mortgage agreed for clients to buy £1.3 million house with second charge to fund refurbishment work
Trinity Financial recently arranged a larger mortgage loan to help our clients buy a £1.3m property. The couple had a large combined income, but their deposit was not big enough to purchase the house and fund the home improvements.
The property in London required extensive work, and they were struggling to come up with a solution because they could only put together a five per cent deposit while retaining funds for stamp duty and the refurbishment costs.
Our adviser, David Sanders, initially found a lender willing to offer the required amount; the rate was close to seven per cent, but the lender declined the application because the property was downvalued.
Why did they need your help?
They asked if we could find a different lender with a five or ten per cent deposit who would use a different valuer; however, David offered them a better option entirely. After considering all options and getting to know their situation, David recommended that they take out a 15% deposit mortgage with a fixed rate just below 4%. He then introduced them to our second-charge partner to secure a second-charge loan following completion of the purchase.
While the second charge was at a high rate, the overall cost was lower for them, as the higher rate only applied for a short period of time until they had added some value to the property, allowing them to refinance in two years, which was when they expected the initial work to be finished.
The applicants were initially hesitant; however, once they saw the comparative cost, the better lender, and had spoken to the second charge provider, they were delighted with the recommendation.
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The information contained within was correct at the time of publication but is subject to change.
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