Many City workers, in the thick of the bonus season, will be searching for value-for-money ways to invest their cash windfalls, and property is often top of the list. But while wanting the best loan rates it is also likely that the customer would want the flexibility to repay significant amounts, without penalty, from any future bonuses.
Example:
Product Year 1 Year 2 Year 3 Yrs 4-5
2Year Discount of 1.80% £50,000 Pay off - -
(pay-rate 4.2% with NO PENALTIES) with bonus
2 Year Fixed Rate at 4.99% £50,000 £50,000 Pay off -
(No extended penalties) with bonus
SteppedDiscount, pay rate of 3.9% in Yr 1
and 4.1% in Yr 2 & 4.3% in Yr 3 £50,000 £50,000 £50,000 Pay off
(no extended penalties) with bonus
5year fixed rate at 5.29% £50,000 £50,000 £50,000 £ 50,000
TOTAL LOAN £200,000 £150,000 £100,000 &poun d;50,000
Total rate payable 4.6% 4.8% 4.8% 5.29%
Simon Jones, director at Savills Private Finance, comments: “A significant proportion of our clients are using our bespoke approach. We can tailor a mortgage portfolio with a lender to mix fixes, discounts and trackers to build some protection against upward rate movements and to enable customers to get the benefit of cheap discounted loans without sacrificing the ability to repay early. This is a more professional way to plan your mortgage liabilities, echoing the practice of corporate treasurers.”
Advantages of multiple interest rates and repayment types:
By selecting a cocktail of interest rates each mortgage can be set up to suit the individual needs of the client
With mortgages often secured on bonuses, the ability to select an element of the loan on a basis that allows partial repayment without penalty is invaluable
While not all of the loan will be repaid early, the ability to repay part will have an immediate effect on monthly interest payments
For more information on these products please call
Savills Private Finance on
0870 900 7762
