Our clients saved nearly £5,000 on their home remortgage by switching lenders. Despite affordability challenges, MFB used their expertise to secure a more cost-effective 5-year interest-only option to secure the deal.
At a glance:
- Existing MFB client approaching their fixed-rate expiry date
- Remortgage to a 5-year interest-only product for a large loan amount
- Challenges with applicant’s proof of income
- Five-bedroom, mid-terraced property in central London
The Case:
This case was for existing MFB clients, a married couple, looking to secure a new rate for their home mortgage. With our client-focused approach, we reached out to let them know they were fast approaching the ERC expiry date, so it was time to find a new rate.
The client’s home was a stunning five-bedroom end terrace property in central London. To keep monthly mortgage costs down, our clients wanted to stay on an interest-only product, preferring to make overpayments each year to reduce the capital balance.
Upon reviewing the client’s remortgage option, it became clear that a remortgage to a new lender would be more cost-effective than staying with their current provider. Having completed a product transfer for their previous mortgage, the client hadn’t undergone the standard underwriting and affordability assessments that comes with a typical mortgage application in some time.
The Challenge:
To borrow the amount required for the remortgage, we needed to use our clients’ combined annual income and the husband’s annual bonus.
Most lenders require a minimum of two years of annual bonus history to factor this into their affordability assessments, but our client fell just short of this time frame. Furthermore, the wife had just received a pay rise, but had not yet received a payslip at the point of their application being submitted. Consequently, the number of lenders we had access to was reduced due to affordability challenges.
Feeling demotivated, our clients were considering staying with their existing lender despite being offered a higher rate to secure the required higher loan amount. However, our expertise and knowledge in the homebuyer mortgage market meant we were able to identify a lender that would accept just one year’s evidence of the client’s annual bonus.
Subsequently, our team spent a lot of time liaising with various departments from the lender to reassure them of the client’s ability to afford the mortgage. Following discussions with the BDMs and the head of underwriting, they were happy to use the wife’s higher salary in their affordability assessments upon our submission of her experience in her role, payslips, and bank statements.
We then calculated that by remortgaging to a new lender instead of taking the current provider’s product transfer rate, our clients will save £4,975 over the 5- year term. With all the challenges settled, our clients were happy to proceed.
The Finance:
Property value: £1,600,000
Loan amount: £1,000,000
LTV: 62.5%
Rate: 4.24% 5-year fixed*
Term: 19 years, interest-only
Lender arrangement fee: 0.45% arrangement fee
Monthly mortgage payment: £3,524.40
*Rate as at February 2024.
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