Purchase of a £2 Million Property in London for an International Student

• Client: International family seeking UK property finance for a student studying in London
• Property: Central London property valued at approximately £2 million
• Challenge: Primary borrower’s income was insufficient to support the required borrowing, while the additional family member did not want to be named on the deeds or take out the mortgage
• Finance: 75% LTV mortgage of £1.5 million supported by a personal guarantor

International families sometimes look to purchase property in the UK for children studying at university, particularly where they want to provide a long-term residence rather than rely on rented accommodation. Enness was approached by an international client looking to purchase a property in Central London for a family member studying at university.

The property was valued at approximately £2 million, and the client wanted to arrange mortgage finance in their own name. The family member who would occupy the property was not in a position to take out a mortgage themselves, meaning the purchase and borrowing needed to be structured around the wider family’s financial circumstances.

The primary borrower’s income alone was not sufficient to support the level of borrowing required. Ideally, the application needed to take another family member’s income into consideration to demonstrate affordability. However, that individual did not want to be named on the property deeds or take on an additional mortgage liability.

This created a structural challenge. The application required a lender that could take the additional family member’s financial strength into consideration without requiring them to become a joint owner or borrower.

Enness identified a private bank prepared to accept a personal guarantor in support of a large mortgage. This provided a way to strengthen the application while keeping the ownership structure as required by the family.

The resulting mortgage was arranged at 75% loan to value (LTV), providing £1.5 million of borrowing against the £2 million property. The facility was priced at 3.5% above LIBOR at the time.

The structure provided the family with a route to purchase the Central London property while allowing the additional family member to support the borrowing without being named on the deeds or taking out the mortgage themselves.

The case demonstrates how a large mortgage can sometimes require a more bespoke approach where the primary borrower’s income does not independently support the required borrowing. A personal guarantee can, in certain circumstances and subject to lender criteria, provide an alternative way of strengthening an application.

For international families looking to purchase UK property for a child studying at university, specialist mortgage finance can help identify lenders able to consider more complex family and income structures.

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, affordability, property suitability and lender criteria. Terms, rates, LTVs and availability may vary depending on individual circumstances.

Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise. A personal guarantor may become liable for the borrower's obligations if the borrower fails to meet the terms of the mortgage. Guarantors should obtain appropriate independent legal advice before entering into a guarantee.