Key features:
Clients owned a family home in London but had always planned on escaping to the countryside to raise their children.
Their current mortgage was on a tracker and their plan was to sell their London property and use the equity and a new mortgage to purchase their dream home.
They had lost his employed job the previous year and had decided to go it alone as a self employed individual however, with less than 1 year’s self-employed history, this was not acceptable with mortgage lenders.
Our client:
They had been living in London for several years and had begun to start their own family. With two young children they had often toyed with the idea of moving away from the big smoke and raising their children in the countryside.
Their current mortgage was on a tracker rate meaning that the rate follows the base rate and can change at any time rather than being fixed. With the bank of England raising the base rate in December 2021, our clients were worried that their mortgage payments would go through the roof so they contacted Oportfolio to see what they could do.
Their initial plan of selling their current home and purchasing a new one would have been rather straight forward however one of the clients had recently become self-employed and because of this, he did not meet the minimum lender requirements to get a brand-new mortgage yet (normally you need a minimum of 2-3 years trading as self-employed).
How did we help?
Our advisor Oliver immediately identified the issue that our clients were going to have with his self-employment and set to work with helping the clients create a new plan of action that would eventually allow them to achieve their goal of moving to the countryside.
As a brand-new mortgage was not on the table due to our client not having the self-employed experience yet. Oliver and the clients decided that the best course of action was to transfer their current mortgage with their current lender on to a fixed mortgage rather than a tracker to avoid any rate increases that they were worried about. The best thing about doing this was that because the clients stayed with their existing lender, they were not required to prove their income again avoiding any unnecessary struggle with being recently self-employed.
We helped the clients come to the decision that they would stay in their current house in London for a further 3 years on their new safe and secure mortgage which would allow the clients to gain more self-employed experience and then they would look at selling and moving to their dream home in the future.
What was the rate?
A 1.26% rate was fixed until 31/01/2027, and after the fixed period, it reverted to the bank’s 3.59% standard variable rate.
The overall cost for comparison is 2.9% APRC. The arrangement fee was £999, and early repayment charges were applied. The mortgage term was 19 years.
