Our client’s interest-only mortgage term was coming to an end with their existing high street lender. They wished to retain the property and secure a new deal for the foreseeable while they decided on their plans for the future.
However, both clients were 74 years old, making it challenging to find a lender who would offer a competitive term.
We successfully secured a 15-year term with a specialist building society. The deal included a 5-year discount at 2.21% below the lender’s variable rate, with an £850 product fee.
Additionally, the deal offered a 10% overpayment facility, allowing the clients to reduce the balance without incurring early redemption penalties.
The primary challenge was sourcing a lender willing to offer the longest term possible. Most high street banks only lend up to age 70 on interest-only, which was already surpassed based on the applicants’ current age. In addition to this, we needed to ensure that the lender would accept multiple income streams for affordability, including income from property, pension pots, and minor dividends.
To address these challenges, we focused on various building societies operating in the UK, as they tend to be more flexible with older borrowers.
We found several options that would lend up to age 80-85, but eventually settled on the only lender we could find that would go up to age 90, resulting in a maximum term of 15 years.
This particular building society was also willing to consider the combined annual income from the client’s tax returns, accepting all proposed income streams. Furthermore, the lender considered the equity in the client’s investment properties as additional security for the interest-only borrowing.
We promptly secured the deal, ensuring that the solicitors had ample time to complete the necessary legal work before the client’s mortgage term expired with their existing lender.
Our clients are now satisfied and have complete peace of mind, knowing that their interest-only mortgage is secured for the long term.
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