We have been given exclusive access to a brand-new mortgage product that I think will be more than interesting to many clients.
Essentially, it is a new second charge mortgage (your current mortgage stays in place) which gives you a pre-agreed credit limit amount which you can then draw down on, and repay, as many times as you like.
You only pay interest on what you have drawdown as required (like an overdraft or offset), it is fast and easy to put in place, and it can be used for many different reasons.
The key details are:
- Funds can be used for any purpose
- £25,000 - £1,000,000 facility amount
- Interest rates from 4.45% per annum
- No early repayment charges
- You can borrow up to 75% loan to value (including your mortgage)
- 30-year term*
- Five-year fixed or variable rate options – all individually priced
- Instant valuations (most are desktop)
- No early repayment charges.
The lender cites the following scenarios where this may be used:
Home improvements - Use the funds to upgrade or extend your home – only pay for funds as you use them then once complete re-mortgage based on the increased value.
Property investment - Create a ‘hunt fund’ to allow you access to liquidity to purchase and develop a property.
Life events - The lender says that the funds have been used for school fee planning (ability to spread over a year, pay for weddings or gift to children to allow them to buy a property or even pay for passion projects like cars and boats).
Financial Strategy - The lender is also happy that the funds be used for debt consolidation, pay tax bills or even invest in new or existing businesses.
Who is this useful to?
This is interesting to those who have ultra-low mortgage rates and long term fixed rates and would rather not refinance the whole loan to release equity. And of course, for those who always need immediate liquidity for all manner for reasons.
How affordability is calculated is also different from a traditional regulated first charge mortgage, giving plenty of benefits.
To see if this works for you, get in touch with our team.
