Extending your mortgage loan period may be very lucrative

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We have recently been advocating the benefits of conservatively refinancing a property and using the proceeds to invest elsewhere.

A number of our clients are in the process of doing so, whilst others do not wish to increase the debt level for their properties.

An example of one of the former is Mr. Smith (not his real name!). He is a retired government servant, lives in Asia and owns one apartment in London which we let and manage for him. We contacted his existing UK lender to see what his options were and they have offered to lend a further £65,000 on his existing property without increasing his monthly repayments. They could do this by simply extending his existing loan for a further 7 years. Mr. Smith knows his apartment will always rent and more than cover his mortgage cost. He is not overly concerned about owning a debt-free property and would rather enjoy an attractive and secure income stream.

If he refinances and reinvests the £65,000 in a fixed interest opportunity with us, he will receive £5,200 p.a. after-tax, with the option of full repayment with six months’ notice. Importantly, his monthly financial commitment/exposure will not increase.

Refinancing is not for everyone, but it is worth exploring all the options before ruling it out.

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