Case study: remortgage existing properties to upsize to new home

03 Mar 2021

Investec Mortage Intermediaries tem

When potential buyers find a home they want to purchase before they have sold an existing property, it can be possible to raise capital for a deposit and secure a mortgage against existing homes

The client

We were approached by a broker acting on behalf of a successful couple working in investment banking and technology. In addition to their salary, their income was comprised in large part of bonuses, stock options and deferred cash and whilst they enjoyed a healthy NAV, their wealth was largely illiquid, being held mostly between property and pensions. 
 

The challenge

The couple had the opportunity to upgrade their main residence to a larger flat within their building; however, they expected that it would sell fast, so they didn’t want to wait for the sale of their current residence. Instead, they were looking to re-mortgage both their existing main residence and a second home to raise the capital needed for the deposit, alongside a mortgage against their new residence. The plan was then to sell their existing main residence once the move was completed and repay part of the loan with the proceeds.
 

The solution

We were able to offer them a Home Link Mortgage so that they could raise capital on their two existing properties to fund the deposit for the new one. The loan was structured in two parts, one part secured against the new main residence and their second home and the other part secured against their current main residence.
 
We provided a loan for the total cost of the transaction and on part one offered an interest-only mortgage for the full term, with annual capital reductions in the first five years. Part two was a two year interest-only facility without repayment penalties, allowing the clients flexibility and time to sell their existing primary residence.
 
We’re no stranger to complex incomes and we were also able to offer them a flexible solution by assessing their total income over a number of years. As a result, the couple were able to rely on a combination of bonus payments and restricted stock options as well as their current salaries to secure their mortgage and new home. 

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