- Client: Self-employed property investor
- Property Value: Slightly above €1.5 million
- Loan: 70% LTV
- Structure: Approximately 25-year fully amortised mortgage
Enness was approached by a self-employed client looking to purchase an investment property in the Balearic Islands for slightly more than €1.5 million. The client had approximately €500,000 available as a deposit and intended to hold the property as a longer-term investment, with the possibility of selling after several years if market conditions were favourable.
The client’s self-employed status created a challenge when it came to arranging the required finance. Their income fluctuated, making it more difficult to satisfy conventional lending criteria. The alternative would have been to establish a significant assets-under-management relationship with a private bank, with more than €1 million needing to be held with the bank.
Enness reviewed the client’s circumstances and identified a lender willing to provide finance at 70% LTV through a fully amortised mortgage over approximately 25 years. This allowed the client to preserve a greater proportion of their available capital while proceeding with the acquisition.
The client anticipated holding the property for around seven to eight years, with rental income forming part of the investment strategy and a potential sale further down the line. Given this timeframe, the financing was structured with a seven-year fixed-rate period before moving onto a variable rate.
The structure provided the client with greater certainty over their borrowing costs during the initial years of ownership while also giving them more flexibility as they approached their anticipated exit. Although the monthly repayments were higher than they would have been with a shorter interest-only structure, the client was satisfied that the overall cost of the mortgage was more attractive for their longer-term plans.
The case demonstrates how self-employed borrowers investing overseas may need a more tailored approach when their income does not fit straightforward lending criteria. By looking beyond the initial income assessment and considering the client’s wider investment plans, Enness was able to identify a mortgage structure suited to the proposed purchase.
If you are considering purchasing property in the Balearic Islands and have a complex income or financial profile, speak to a mortgage specialist to discuss your financing options.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, affordability, underwriting, property assessment and lender criteria. Terms and availability will vary depending on individual circumstances, the property and the proposed transaction. Property values and rental income can fall as well as rise, and past or projected performance is not indicative of future results.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
