A client may own a main residence, a London property, a country home, an overseas residence and one or more investment properties. If each mortgage was arranged at a different time with a different lender, no single institution may have a complete view of the debt position.
Willow supports professional advisers through its wealth manager and financial adviser partnership service. This article forms part of Willow’s HNW clients, private banking and property finance guide series.
Willow’s role is to assess the mortgages and property-finance structures. The wealth manager remains responsible for investment advice, liquidity planning and the client’s wider financial strategy.
When Should the Full Debt Position Be Reviewed?
A review should not be limited to moments when a mortgage product is about to expire. It may be appropriate whenever one financial decision could affect several properties or repayment plans.
Before Another Property Purchase
A new lender will usually need to understand existing mortgages and committed expenditure. Reviewing the complete position early can reveal whether current debt reduces affordability or whether existing equity could support a more appropriate structure.
Before a Fixed Rate or Facility Matures
A client with several mortgages may have multiple refinancing dates. Starting early allows the professional team to assess whether facilities should remain separate, be refinanced individually or be considered together.
Before a Significant Investment Withdrawal
Investments may support interest-only repayment strategies, private banking eligibility or liquidity reserves. A withdrawal could therefore affect more than the portfolio.
After a Major Change in Income
Retirement, a business sale, reduced bonuses, partnership changes or a move overseas can alter affordability and future lender options even if current mortgage payments remain manageable.
Before Selling One of the Properties
Sale proceeds may be expected to repay another mortgage or provide liquidity elsewhere. If several properties support one facility, the lender may control how much security can be released.
When Rates or Cash-Flow Requirements Change
Several variable-rate or maturing facilities can create a substantial combined increase in annual interest. The effect may be overlooked when each lender communicates only about its own loan.
Following a Family, Ownership or Residency Change
Marriage, divorce, death, inheritance, gifting, trust changes or a change in tax residency may affect ownership, affordability, security and the intended repayment of individual facilities.
Review each facility individually—but make decisions using the client’s complete property debt, liquidity and repayment position.
Build a Complete Property and Debt Map
The starting point is a factual schedule covering every property and secured facility.
For each property, record:
- address, country and current use;
- legal and beneficial ownership;
- current estimated value and valuation date;
- first mortgage lender and outstanding balance;
- second or subsequent secured charges;
- interest rate and whether it is fixed, variable or tracker-based;
- fixed-rate expiry, review date and final maturity;
- capital-and-interest, interest-only or part-and-part repayment basis;
- monthly or annual payment;
- early repayment charges;
- the interest-only repayment strategy, where applicable;
- rental income and property costs, where relevant;
- guarantees or additional security;
- whether the loan is personal, corporate or trust borrowing; and
- any lender consent required before a sale, lease or further charge.
The schedule should also identify facilities that are not described as mortgages but are secured against property, including bridging loans, development facilities, revolving credit and guarantees.
Documents That May Be Required
- Recent mortgage statements.
- Facility and offer letters.
- Early repayment charge information.
- Land Registry title documents or overseas equivalents.
- Current tenancy or lease information.
- Recent property valuations.
- Evidence of repayment vehicles.
- Company, partnership or trust ownership documents.
Measure the Aggregate Position
Once the individual loans are mapped, the review can calculate the combined position.
Useful measures may include:
- total property value;
- total secured debt;
- loan-to-value for each property;
- combined property loan-to-value;
- total annual interest and capital payments;
- weighted average interest cost;
- the proportion of debt on fixed and variable rates;
- the proportion on interest-only terms;
- debt maturing in the next one, three and five years;
- equity available in each property;
- early repayment charges across the portfolio; and
- liquid assets available to support payments or repayments.
Illustrative Example Only
Assume a client owns three properties with a combined estimated value of £5.5 million.
- Main residence: £3 million value and £1.2 million mortgage at 4.20%.
- Second home: £1.5 million value and £750,000 interest-only mortgage at 5.10%.
- Investment property: £1 million value and £600,000 mortgage at 5.50%.
Total secured debt is £2.55 million, producing a combined loan-to-value of approximately 46.4%. Indicative annual interest would be approximately £121,650, before capital repayments, fees or other costs.
A one-percentage-point increase across all three balances would add approximately £25,500 to the annual interest cost. The combined loan-to-value appears moderate, but the individual investment property is at 60% and may be assessed under different lender criteria.
These figures are hypothetical and do not represent available lending terms or a recommendation.
Aggregate figures provide context, but they should not conceal individual risks. One property may have a high loan-to-value, an approaching maturity or an inadequate repayment strategy even where the combined position appears strong.
Compare the Cost of Change With the Cost of Doing Nothing
A lower new mortgage rate does not automatically mean refinancing is beneficial. The review should include:
- interest over the relevant comparison period;
- early repayment charges on existing loans;
- new arrangement and application fees;
- valuation and legal costs;
- broker fees, where applicable;
- exit and discharge fees;
- costs of extending the borrowing term;
- the effect of switching repayment basis;
- fees for releasing or substituting security;
- foreign-exchange costs;
- tax or ownership consequences; and
- the cost of any additional banking relationship.
Remortgaging one property may produce a saving but create an early repayment charge elsewhere if the facilities are connected. Extending a term may reduce monthly payments while increasing the total interest paid.
MoneyHelper guidance similarly notes that remortgage comparisons should account for fees, charges and early repayment costs rather than relying on the new interest rate alone.
Stress-Test the Full Position
The purpose is not to predict the future. It is to identify whether several plausible pressures could arrive at the same time.
Rate Stress
Two or more fixed rates expire within the same year and refinance at a higher cost.
Value Stress
One property’s value falls, restricting refinancing or the release of equity.
Income Stress
Bonus, rental, business or investment income reduces while mortgage payments rise.
Timing Stress
An intended property or business sale is delayed beyond a facility maturity date.
The review may test:
- one-, two- and three-percentage-point interest-rate increases;
- lower property valuations;
- rental voids and higher property costs;
- reduced bonus or business income;
- a fall in investments supporting interest-only repayment;
- refinancing one year later than planned;
- the simultaneous arrival of tax, capital-call or school-fee commitments; and
- whether sufficient unencumbered liquidity remains after each event.
FCA responsible-lending rules require applicable lenders to consider actual continuing credit commitments when assessing affordability. A new lender may therefore need information about the entire debt position, not simply the property being refinanced.
A client can have substantial total property equity and still face a liquidity problem if several loans reprice or mature before that equity can be accessed.
What Might Follow From the Review?
The review does not begin with an assumption that every mortgage should be moved or consolidated. Possible outcomes could include:
Leave a Strong Facility Unchanged
An existing mortgage may have attractive pricing, valuable flexibility or prohibitive early repayment charges. The appropriate action may be to retain it.
Refinance One Property
A single facility may be approaching maturity or no longer fit the client’s circumstances, while the other mortgages remain appropriate.
Use a Further Advance or Second Charge
Additional borrowing may be raised without replacing an existing first mortgage. The combined cost, affordability and secured position must be assessed.
Consolidate Selected Facilities
A lender may consider a facility secured across more than one property. This can simplify debt or release equity, but it can also connect assets that were previously independent.
Stagger Future Maturities
Using different fixed-rate or maturity dates may reduce the risk of several facilities requiring refinancing simultaneously.
Reduce Debt
Where consistent with the client’s wider plan, available cash or property-sale proceeds could reduce selected borrowing. The tax, investment and opportunity-cost implications belong with the relevant advisers.
Restructure the Repayment Basis
Part of an interest-only balance might move to capital repayment, or the client may make planned capital reductions. Affordability, lender policy and early repayment terms remain relevant.
What Should the Wealth Manager Review?
The wealth manager does not need to recommend the mortgage facilities. Their contribution is to understand how the debt interacts with the client’s investments and wider financial plan.
Relevant questions may include:
- Which investments or future receipts support each repayment strategy?
- Are the same assets being relied upon more than once?
- How much unencumbered liquidity remains after planned expenditure?
- Could investment withdrawals affect private banking or lending terms?
- Are portfolio-backed facilities included in the debt schedule?
- Could market falls coincide with mortgage maturities?
- Does the client expect to sell, gift or transfer any property?
- Will retirement or relocation alter affordability?
- Are there known tax, capital-call or family commitments?
- Does the debt structure restrict the wider investment plan?
Willow can then assess the property-finance implications and available lender routes without taking responsibility for investment suitability or tax planning.
When to Involve Willow
An early, anonymous discussion may be worthwhile where:
- the client owns several mortgaged homes or investment properties;
- two or more facilities mature or reprice within the next 18 months;
- the client wants to purchase another property;
- one property is expected to repay borrowing secured elsewhere;
- the client has both first and second charges;
- a lender holds security over several properties;
- investment assets support more than one repayment strategy;
- the client’s income, residency or ownership structure has changed;
- the adviser cannot see a consolidated debt and maturity schedule; or
- the client wants to understand whether refinancing should be considered collectively or property by property.
The initial outline can remain anonymous. Approximate property values, mortgage balances, rates, maturity dates, repayment bases and the client’s objective will usually establish whether a fuller assessment is worthwhile.
Have a Client With Several Properties and Several Lenders?
Share a high-level, anonymous schedule of property values, mortgage balances, rates and maturity dates. Willow can identify where a detailed property-finance review may be valuable.
Frequently Asked Questions
These answers provide general information. The appropriate review depends on the client, properties, facilities and regulatory status of each transaction.
When should the full property debt position be reviewed?
A review may be useful before a new property purchase, ahead of mortgage maturities or fixed-rate expiries, after major income or liquidity changes, and whenever one property or asset is expected to repay debt elsewhere.
Should each mortgage be reviewed separately?
Each facility requires individual analysis, but the client should also understand the combined debt, interest cost, maturity schedule, repayment strategies, security and effect on available liquidity.
Is consolidating several mortgages always cheaper?
No. Consolidation may create early repayment charges, arrangement fees, new valuations, legal costs, longer terms, additional security or less flexibility. The complete cost and risk must be compared.
Can one lender take security over several properties?
Potentially. A lender may consider cross-collateralised borrowing, but the arrangement can connect properties that were previously independent and may restrict later sales or refinancing.
What can Willow assess?
Willow can map existing property debt, examine lender terms and identify potential mortgage or refinancing routes. Tax, investment and legal advice remains with the client’s relevant professional advisers.