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Capital raising using a higher income multiple

A second charge mortgage case study

Objective

Brightstar were presented with a case where the customer needed to raise capital to settle an outstanding balance of £170k on a property that was joint owned with their elderly mother.

Obstacle

There was only 1 month before the existing interest only mortgage was due to expire.  The customer had attempted to use the proceeds from one of their 9 buy-to-let properties but the property sale fell through.

 

The customer had an £8k early repayment charge until July 2018 on their main residence.  There was an attempt to raise capital via a re-mortgage, but potential lenders’ took the customers property portfolio into consideration and the maximum lending offered would not have raised enough to clear the mortgage on the mother’s home.

Outcome

We were able to secure the required finance via a second charge mortgage, using the customers’ main residence.  The product was placed with a lender who offered a slightly higher income multiple than a first charge lender could offer, and they also disregarded the buy-to-let properties in the background.

 

The rate was very competitive at 5.2% variable at 75% LTV with no early repayment charges.

 

This enabled the customer to raise funds within 3 weeks and pay the mortgage off leaving the mother stress free in her property.

 

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