High Value Debt and Financing - What HNWIs Should Know

2nd Dec 21
High Value Debt and Financing - What HNWIs Should Know - Enness Global

As we’ve grown our product offering at Enness and worked with more HNWI and their advisors, we overwhelmingly hear the same thing: debt and finance are something of an unknown.

Knowing where to start, what your options are and who to approach for a loan can be confusing, especially if you want to borrow a lot or have multiple income streams, holdings and your wealth is spread across several geographies and asset classes. Here’s a rundown of what we think is helpful to know in the first instance.

Financing And Debt Are Often Unfamiliar (But This Is Normal)

We wish this was more widely recognised for HNWI and their advisors: it is totally normal not to know much about debt and finance.

Traditionally HNWI have used cash to buy assets or invest… a million pounds for a house here, two million euros to invest in a business over there. For their part, advisors are also set up to support these cash transactions, and as a result, debt and finance is something of unknown territory for much of the top of the market.

It’s a normal thing to experience. At this level, when you have lots of assets, structures and income streams, lending is technical, especially when you want to borrow a million pounds or more. Many of our first-time clients have very little understanding of how borrowing works, their options, which assets to use, which lenders to work with or how to use financing to their advantage.

Especially when you’re incredibly accomplished in other areas of your life, the idea of having to sit with a lender and go over the very basics of borrowing can make HNWI feel ill at ease. Advisors, too, can feel out of their depth for similar reasons.

Enness regularly works with HNWI and their advisors who are borrowing for the first time and aren’t sure where to start. Whether you want to borrow today, next month or in three years, we’re happy to chat with you about how financing works, what lenders will be looking for and answer all your questions about the basics of significant or international finance. We cover this ground all the time, and we can explain it in a way that will make sense and apply to you and your scenario.

You Don’t Need To Know What Financing Solution You Need

Because finance is unknown territory, our clients often don’t know what finance package they need, what the solution looks like, and sometimes, if there is a solution at all. Our clients often approach us with an end goal and ask us to help work out the best lending product.

We’ll look at your objectives and work backwards to find a competitive finance package that will get you where you need to be. Whether that’s solving a cash flow challenge or buying a superyacht, we can work out what the solution is, how to structure it and which lender will offer the best package.

Financing Isn’t A Last-Chance Saloon Option

Over the past ten to fifteen years, there have been times where ‘finance’ and ‘debt’ have garnered negative coverage in the press. Namely, this has been when specific instruments haven’t been used correctly or when lenders offered products to individuals who weren’t on the right financial footing to borrow in the first place.

However, more and more HNWI and business owners are seeing the advantages of debt, and long may the trend continue. Finance is increasingly being understood as an excellent path to achieving milestones faster than relying on cash or the capital you have available at any given moment.

For those with significant wealth and in a solid financial position, finance is the ultimate problem solver and opportunity creator. It can be used as the ‘go to’ instrument to accelerate growth and achieve goals, rather than something that’s exclusively considered as a last resort.

Used to maximum effect, we believe that finance and debt should be seen as a strategic tool to create new potential, solve problems and help borrowers – whether you are a business owner or a HNWI.

You’ll Have Lots Of Options

Most people assume only one product or solution will ‘unlock’ the finance they need. This is often not the case (there are many ways you can finance a property purchase that have nothing to do with a mortgage, for example).

When working out the best finance package for you, Enness takes a contrarian approach to most of the market. We’ll look at your assets and requirements first and what you want finance for second. We do this because what you can offer as security, how much you want to borrow, when you need to draw down the funds, and your exit will usually dictate what the best route and finance package looks like for you. The reality for most HNWI is that you will usually have an abundance of options to choose from when it comes to financing.

If A Lender Has Turned You Down, It’s Not Game Over

It is incredible how regularly HNWI and successful businesses are turned down for finance. Large banks, in particular, like to market themselves as being the first stop for wealthy individuals and successful companies looking to borrow. However, in many cases, they don’t want to lend for anything but very plain-vanilla scenarios.

When most would-be borrowers are turned down for a loan, most assume that they can’t access finance from any lender and then revert to using cash.

The reality for HNWI or businesses is that you’ve either approached the wrong lender or, through no fault of your own, you haven’t been able to present your case in the strongest light.

With access to more than 500 lenders, Enness can open doors to the lenders that will be in a position to let you borrow – even if you’ve been turned down elsewhere. Able to present your case in the strongest way and take on the burden of approaching lenders and negotiating a deal, Enness will be able to support your application – no matter how much you want to borrow or what you want to achieve.

What Enness Can Offer

Enness regularly helps high-net-worth individuals to access finance for a variety of purposes. Enness can broker cross-border finance to be deployed in a variety of ways and to achieve an assortment of outcomes. For example:

Profile: A globally mobile, ultra-high-net-worth couple (estimated wealth in excess of $35 million) with a global portfolio of properties, a family business group, fine art, income from a trust.

Financing solutions delivered by Enness for the couple:

  • A 70% LTV mortgage on a high-value holiday home in London. The case was particularly complex as the couple are non-UK residents and derived multi-currency income and income from a trust.
  • Raising capital to buy out an external investor in one of the couple’s family’s business entities. Enness secured a £3.3 million loan against another of the couple’s holiday homes in St. Tropez to create the required liquidity.
  • Luxury asset finance to buy modern art to expand a private fine art collection. Secured against the couple’s existing collection, Enness secured a loan to allow the couple to buy a piece of modern art at auction by an acclaimed artist, adding significant value to the clients’ luxury asset portfolio.