THE SCENARIO
Luxury asset finance can provide an alternative source of liquidity where a client has substantial value tied up in an asset but does not want to sell it. Enness was approached by an international client based in Monaco who was looking to acquire a property in Somerset for an elderly family member.
The property was located within a retirement village and valued at approximately £750,000. The client had some cash available towards the purchase but required additional funding to meet a completion deadline of just two weeks.
The client’s international profile added complexity to the application. They had no UK residency, received income primarily in US dollars and had a variable income structure due to the international nature of their work.
The property itself also presented a challenge. Mortgages against retirement village properties can be more difficult to arrange because lenders may have specific requirements relating to the property and its ownership structure. Given the tight completion deadline, a conventional mortgage route was unlikely to provide a suitable solution within the required timeframe.
OUR SOLUTION
Rather than focusing solely on the property being purchased, Enness reviewed the client’s wider asset position to identify an alternative source of security. This revealed a rare classic vehicle valued at approximately $1 million which the client intended to retain rather than sell.
Enness approached a specialist lender with experience in financing collectible and luxury vehicles. Although the lender did not typically accommodate overseas borrowers with foreign-currency income or lend against vehicles of this particularly specialist nature, Enness was able to negotiate a bespoke facility based on the client’s wider circumstances and the value of the vehicle.
The resulting facility was arranged at a rate of 8.5% per annum. While this was not necessarily the lowest-cost financing option available, the structure provided the speed required to meet the two-week purchasing deadline and allowed the client to retain ownership of the classic vehicle.
The repayment structure was also tailored around the client’s anticipated liquidity. The client expected a significant investment payout within the following 12 months, so the lender agreed to a 24-month term with a proportion of the debt serviced during the term and a £420,000 balloon payment at maturity.
The case demonstrates how luxury asset finance can provide an alternative route to liquidity where conventional property lending is unsuitable or cannot be arranged within the required timeframe. Collectible vehicles and other high-value assets can, subject to lender appetite, valuation and suitability, be used as security without requiring the owner to sell the asset.
For high-net-worth clients with substantial value held in specialist assets, luxury goods finance can provide access to capital where the asset itself forms an important part of the overall financial strategy.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, asset valuation, liquidity, suitability and lender criteria. Terms, rates and availability may vary depending on individual circumstances.
Risk Warning:
Assets used as security may be repossessed or otherwise realised if repayments are not maintained. Collectible and luxury assets can fall in value and may be affected by changes in market demand, liquidity, condition and valuation. Where borrowing or income is denominated in different currencies, exchange-rate movements may also affect the cost of borrowing and the value of assets. Balloon payments can result in a significant amount remaining outstanding at the end of the agreed term and require a suitable repayment strategy.
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.
