Case Study –Retaining an Interest-Only Mortgage While Prioritising Flexibility

The Situation

A client approached Henry Dannell to review the mortgage on their main residence.

Rather than refinancing with a new lender, the client wanted to understand the options available with their existing provider. Their preference was to retain the interest-only structure while moving onto a tracker product.

Flexibility was an important consideration. The client wanted the ability to benefit should the underlying interest rate reduce over the following 24 months, while avoiding the additional process associated with moving the mortgage to another lender.

The Challenge

The objective was not simply to identify a new mortgage rate. The recommendation needed to balance the client's preferred structure, flexibility and wider practical considerations. The client wanted to retain their interest-only mortgage, remain with their existing lender and move onto a tracker product that aligned with their objectives. This required us to assess the options available with the existing lender and establish whether remaining in place could provide an appropriate solution without introducing unnecessary complexity. Timing was also important. Mortgage products and pricing can change between initial selection and completion, meaning the advice process should not necessarily end once a product has been secured.

The Solution

Having reviewed the available options, we progressed with a tracker product through the client's existing lender while retaining the interest-only structure. This allowed the client to remain with their current provider and maintain their preferred mortgage structure, while gaining the flexibility associated with the tracker product. Importantly, we continued to monitor the lender's available products through to completion. Before completion, the margin on the available tracker reduced. We were therefore able to update the product to reflect the improved pricing rather than allowing the client to complete on the option originally selected. The result was a product transfer structured around the client's priorities: retaining the interest-only arrangement, remaining with their existing lender and maintaining the flexibility they were seeking, while also benefiting from the improved pricing available before completion. Please note: A mortgage is secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. With a tracker mortgage, monthly payments may increase if the underlying interest rate rises. Mortgage availability and lending are subject to individual circumstances and status.