When a family decided to stop dreaming about their ideal home and start building it, they faced a significant financial puzzle. Here’s how specialist residential mortgage advice from Henry Dannell unlocked the funding they needed.
£2,000,000 mortgage raised | 66% LTV | 25-year interest-only term | 2-year fixed rate | St Albans, Hertfordshire | Unencumbered property | Joint application
The Dream: Building a Home From the Ground Up
For many people, the perfect home isn’t always one that you can simply buy. That was precisely the situation for this family, who had spent years envisioning a bespoke property designed exactly to their specification, on their own plot of land.
The challenge was straightforward in concept but complex in execution: to release enough capital from their existing home to purchase the land, while preserving their current lifestyle and keeping their finances in the best possible shape to take on a self-build project shortly after.
Their existing home, a substantial property in St Albans, Hertfordshire, valued at £3,025,000 was owned outright with no mortgage. That unencumbered status was a significant asset, but turning equity into usable funds required the right lender and the right structure.
The clients were in an enviable financial position, but the case required careful, specialist handling to present correctly to a lender.Jamie Roberts – Specialist Lending Adviser, Henry Dannell
The Mortgage: What Was Needed
The family needed to raise £2,000,000 against their existing property in St Albans, representing a 66% loan-to-value ratio, which is a comfortably conservative position from a lender’s perspective. The funds would be used solely to purchase land, with a separate self-build mortgage application to follow once the plot had been secured.
Given the nature of their plans and their financial profile, an interest-only mortgage over a 25-year term was the most appropriate structure. This keeps monthly outgoings lower, preserving cash flow during what is typically an expensive period, particularly when a self-build is in the pipeline. A 2-year fixed rate product provided the certainty they needed in the short term, with the flexibility to review their options once the build was underway.
The Mortgage at a Glance
- Property Value: £3,025,000
- Mortgage Required: £2,000,000
- Loan to Value: 66%
- Repayment Type: Interest Only
- Term: 25 Years
- Product: 2-Year Fixed Rate
- Security: Unencumbered residential property
- Location: St Albans, Hertfordshire
The Complexity: Why This Wasn’t a Straightforward Application
Despite the strong security position and a sensible loan-to-value, the income picture required careful navigation. The primary applicant is a UK resident and in senior employment with a strong base salary, supplemented by a meaningful annual bonus, with two consecutive years of bonus payments evidenced to demonstrate consistency and reliability of that income stream.
The second applicant is a homemaker, meaning all income for affordability purposes was drawn from the primary applicant and, critically, from the couple’s investment portfolio.
The Role of the Investment Portfolio
The family held a significant investment portfolio managed by a professional wealth management firm. At its peak in the months prior to application, the portfolio was valued at close to £3.9 million. By the time the formal application was submitted, that figure had reduced considerably to just over £1 million, reflecting capital deployed in connection with the land purchase and associated costs.
To support the required level of borrowing, a deemed income of 4% of the portfolio value was applied. This is a recognised approach among specialist and private lenders when dealing with clients who hold substantial invested assets: rather than requiring the client to liquidate positions or make actual withdrawals, a notional income is calculated based on a percentage of the portfolio. The money itself stays under management, known in the market as a “dry loan” arrangement.
Without this deemed portfolio income, the level of borrowing required simply could not have been achieved on the primary applicant’s earned income alone. Identifying the right lender was central to making the case work.
The portfolio income approach meant the clients didn’t need to disrupt their investment strategy. The wealth stays invested; the mortgage gets placed.
Presenting the Case: Three Dependents and Significant Childcare Costs
The couple have three dependent children, with substantial nursery fees covering all three. This level of ongoing committed expenditure is exactly the kind of figure that can weigh heavily on a lender’s affordability calculation if not handled correctly.
In this case, the childcare costs were offset against the remaining funds within the investment portfolio. The lender could see clearly that the portfolio held sufficient capital to cover these ongoing commitments, without those costs needing to be deducted from the income used to support the mortgage itself. This approach was transparent, well-documented, and entirely appropriate given the family’s overall financial position.
No other debts or credit commitments were disclosed, which kept the affordability picture clean outside of these carefully explained elements.
The Key Challenges and How Each Was Resolved
Income insufficient without portfolio: A 4% deemed income applied to the investment portfolio brought total assessable income to the level required to support a £2,000,000 loan.
Variable bonus income: Two consecutive years of bonus payments were fully evidenced, with an average figure used in the affordability assessment, demonstrating that bonus income was consistent and recurring, not a one-off.
Non-earning second applicant: The second applicant’s status as a homemaker was accommodated. Their contribution to the household was clearly presented, and the joint application structure was used to reflect the shared financial position.
Significant childcare costs: Nursery fees for three children were offset against remaining portfolio capital, keeping them outside the core income and expenditure calculation without concealing them from the lender.
Significant portfolio value reduction: The drop in portfolio value from nearly £3.9 million to just over £1 million was explained in full as part of the case narrative. Transparency here was essential; a well-evidenced explanation is always preferable to an unexplained anomaly.
Interest-only repayment strategy: Multiple credible exit routes were identified and presented: the unencumbered St Albans property, the investment portfolio, and the future self-build asset, all of which provide robust means of repaying the capital at the end of the term.
Funds remaining under management (“dry loan”): Confirmed clearly that no actual portfolio withdrawals were required to service the mortgage. The income is notional, and the portfolio remains intact and invested throughout.
The Outcome: Land Secured, Dream in Motion
The remortgage completed successfully. With £2,000,000 released from their St Albans home at a conservative 66% LTV, the family were able to proceed with the land acquisition as the first step towards building the home they had always envisioned.
The next stage of their journey involves a self-build mortgage to fund the construction itself. Having structured the remortgage correctly from the outset, with appropriate lender selection, a clean case narrative, and well-presented income evidence, the family are now in the strongest possible position to take that next step.
This case is a reminder that complex doesn’t mean impossible. Clients with non-standard income profiles, significant assets, and ambitious plans can absolutely access the lending they need for a property purchase, but it requires an adviser who understands how to present a case correctly, which lenders are suited to it, and how to navigate the nuances that would trip up a more conventional application.
Every detail of a case like this matters, from how bonus income is evidenced to how a portfolio reduction is explained. Get it right, and the right lender will say yes.
Could This Apply to You?
If you own a property outright or have significant equity and are looking to raise capital for a land purchase, a self-build project, or any other property investment, this case study shows what’s possible with the right advice. Equally, if your income profile includes bonuses, investment returns, or other non-standard elements, specialist mortgage advice can make the difference between a declined application and a completed one.
We work with clients who have complex financial profiles every day. Whether you’re planning a self-build, looking to remortgage a high-value property on an interest-only basis, or simply need a mortgage expert who can handle something more involved than a standard case, we’d love to hear from you.
This is a case study and not indicative of typical results. Past performance is not necessarily representative of future results. This information is for general purposes only and does not constitute financial advice. Please seek professional advice before making any financial decisions. 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. Mortgage deals may not be available, and lending is subject to individual circumstances and status.
