The borrower’s income was complex and was derived from a number of elements including basic salary, supplementary compensation allowance, cash award, vested restricted stock units (RSUs) and long-term incentive plan (LTIPs).
Over the last three years, the investment banking industry has faced several challenges. Given the movements in the industry, the client’s income was awarded in varying timeframes. Furthermore, some of their income was in US dollars, so foreign currency volatility had to be considered carefully.
The client intended to sell their existing main residence and two buy-to-let properties to purchase the new property. The nature of the new property was unusual as it was a single property split into two self-contained flats; one to be used as their primary residence (with a freehold title) and one to be used as a buy-to-let (with a leasehold title). The client intended on collapsing the leasehold upon purchase and leaving the two flats under one single freehold title.
Investec worked closely with the client to provide them with the best facility to enable them to collapse the leasehold on one of the flats and meet their longer-term objectives. We analysed the client’s income structure in detail and established a baseline income that would provide affordability and ensure the client could service the loan. We provided one loan at 70% LTV in two parts: an owner-occupied mortgage (part one) and a buy-to-let mortgage (part two). The mortgage was provided on an interest only basis for a 15-year term.
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