Orton Financial has arranged a short-term, interest-only facility of around £4.7m for high-earning clients.
The specialist mortgage adviser said the case highlights how high-value borrowers can be underserved by mainstream lenders when their income, assets or repayment plans do not fit traditional criteria.
The clients, who worked in the investment sector, were purchasing a high-value residential property in the South East after agreeing a purchase at just over £3m.
However, they needed to sell their existing home as part of their longer-term repayment strategy and required a facility that allowed them to complete the purchase first, then reduce the debt once the existing property was sold.
Luther Yeates, founder and head of mortgages at Orton Financial, said: “There are segments in the high-value market that standard lenders do not reach properly.
“These are clients with high incomes, valuable assets, and a clear plan, but their circumstances do not always align with a conventional mortgage or a standard bridging product.
“This can leave them with limited options, or worse, pushed towards a structure that does not reflect what they actually need.”
Underserved
The clients had a strong but non-standard income profile, and the case required a structure that could support the purchase before the existing property was sold.
Orton helped refinance the clients’ existing property onto a tracker product, allowing them to avoid exit penalties when they were ready to move.
Yeates said: “This is exactly where high-value clients can be underserved.
“They may have the income to support the borrowing and a clear plan to reduce the debt, but if the product is too rigid, they can end up paying unnecessary penalties or being forced into a structure that works against them.
“For clients at this level, flexibility can be just as important as the headline rate.”
Orton arranged a facility at 90% of the combined property values, with the lender fee added to the loan. The facility was structured on an interest-only basis over 18 months, with no exit penalties.
The rate was priced at 4.8%, significantly below comparable tracker mortgage options available to the clients at the time, which were around 6.68%. On a facility of this size, that difference equated to an annual interest saving of approximately £86,000.
This allowed the clients to complete the purchase of their new home while still being able to sell their existing property and reduce the loan when the timing was right.
Look beyond standard lending
Yeates said the case highlighted why advisers need to look beyond standard lending assumptions when working with high-earning clients.
He added: “A standard mortgage may not be suitable if the client expects to repay a large part of the debt shortly after completion. At the same time, traditional bridging finance may not provide enough leverage or flexibility for the client’s circumstances.
“The advice has to start with the client’s actual position. What is their income? How is it paid? What assets do they have? What is the exit route? And what happens if they sell sooner than expected?
“When it comes down to it, clients need finance that gives them the time and flexibility to arrange their affairs properly. That’s where specialist advice can make a real difference.”
