Question
Is it possible to get an interest-only mortgage for £2m, if the client only has a 10% deposit?
Paul Welch, managing director of Largemortgageloans.com, responds:
In the larger mortgage market, deals like this are not available on the high street, but there are a few private banks that are willing to lend on high loan-to-values such as 90%.
They will require that the mortgage amount be reduced to a lower loan-to-value ratio within a set period of time.
For example, after a period of three years, the LTV on the mortgage should have reduced from 90% to 75%.
These requisites will be written into the terms and conditions of the loan.
For example, in a recent deal I worked on, a private bank was willing to offer a £2.1m interest-only mortgage at three-month Libor, plus 2.75%.
Written into the terms of the loan were early capital reductions, to reduce the loan-to-value ratio to 60% in three years.
