Our latest case study demonstrates why seeking expert advice could prove far more valuable, potentially saving you thousands of pounds.
Many borrowers choose to arrange their own product transfers, whether for their residential mortgage or investment properties. However, our latest case study demonstrates why seeking expert advice could prove far more valuable, potentially saving you thousands of pounds.
A product transfer allows you to switch to a new mortgage rate with your existing lender without making significant changes to your borrowing, such as requesting additional funds or altering the terms of your mortgage. For many borrowers, it offers a straightforward and cost-effective alternative to a traditional remortgage, while also helping them avoid reverting to their lender’s typically higher Standard Variable Rate (SVR) when their current deal ends.
While product transfers come with both advantages and limitations that should be carefully considered, our recent client experience highlights an often-overlooked factor: the value of having a broker manage the process on your behalf. As this case study shows, professional advice can make a significant difference to the outcome and the amount you ultimately pay.
The Client:
An existing client with a £1.75m multi-unit investment property was considering a product transfer with their existing lender while also remortgaging the property to provide equity for refurbishments.
The Problem:
The HMO property was a pair of self-contained flats located in a popular residential area of London that had been converted in 2016 with extensive alterations undertaken. The property could be let to a maximum of 10 people with 8 living as households.
While the property met the UK Decent homes standard in terms of spec, condition and state of repair, our client wanted to undertake some property refurbishments as it had been a decade since any major alterations had been made.
Self-employed as a project manager, our client had gone direct to their existing lender where they had been offered a 5-year fixed rate at 5.90% and had approached a different broker for a comparable rate which was 5.54% with no lender arrangement fee.
The increase in monthly mortgage payments would have seen an additional increase in costs of close to £42,500 over the 5-year period.
The Solution:
This prompted a discussion with MFB to determine if there were any competitive rates on the market.
Upon first inspection, we discovered the 5.54% rate would be ineligible as the multi-unit property had too many rooms which exceeded the lender criteria.
Secondly, we found a 5-year, fixed rate at 4.90%, but with valuation and legal costs.
We ran the numbers and demonstrated that, while the 4.90% rate did come with additional costs, the overall re-mortgage would prevent an increase in costs up to £42.5k.
The client agreed to the deal, ensuring they could repay the existing lender and still have over £20k to undertake refurbishments on the properties.
Property Details:
Property Value: £1,750,000
Loan Amount: £1,100,000
LTV: 63%
Monthly Mortgage Payment: £4,581.50 on a 5-year, fixed rate at 4.90%
Lender fee: 2%
Monthly Rental Income: £9,500
Gross Yield: 6.5%
Application: Remortgage of multi-unit property (2 flats with 4 beds in each).
Have a similar case?
If you have a similar case you would like to discuss, get in touch, and one of our expert mortgage brokers will be happy to advise.
