Jane has been a client since 2010 and three years ago started her own business, which also uses the bank for its office accounts. Jane wanted to renew her interest-only mortgage for her £2.6 million house, which is currently rented out to a tenant, with a 15-year-term in her sole name.

She also flagged that, in a year’s time, she was looking to move back into the house with her partner Brian, and become the owner-occupier again. They would then seek to sell Brian’s house and use the proceeds to pay down some of the mortgage.

The lending process

Given she was looking to move back into the property in a year’s time, we agreed with Jane that it would be best to apply for a capital repayment mortgage instead, to start to pay down the principal given her earnings would easily cover the costs.

We also recommended that the 15-year-term be extended to 20 years, and that the mortgage be in joint names, given Brian would be living in the house and contributing to the mortgage.

The results

With the changes to the loan reducing the level of risk to the bank, this allowed us to reduce the fixed rate of repayments by 0.5% for the entire term of the loan. The lower repayments would afford Jane a much better financial outcome, and she would not be left with a large liability so near her expected date of retirement. 

In addition, the revised approach meant that Jane would save on future arrangement and valuation fees as she would only be renewing her mortgage once, rather than a second time in the near future.