Liquidity is always a competitive advantage, but it is likely to be especially so in 2023, given global markets are braced for volatility, potentially weak growth and a possible downturn in economic activity. Periods of economic volatility can present opportunities and challenges in equal measure. Some high-net-worth individuals will look to invest in opportunities that represent good value and others may need capital to solve short-term cash flow challenges or to consolidate or restructure debt.
Whether you are faced with a challenge or an opportunity, the faster you can access capital, the sooner you will be able to move forward. Using your existing assets, such as an investment portfolio, property or luxury assets to raise liquidity without disposing of them is likely to be advantageous, as it will mean you can benefit from it's potential future appreciation. Alternatively, if you do plan to dispose of the asset(s), you will give yourself time to do so at a timescale that supports you in getting the most value possible from a sale.
Bridging loans can be used by individuals or businesses, and this type of finance will allow you to raise significant capital quickly, using residential or commercial real estate as security for the loan. As well as using real estate in the UK as collateral for a bridging loan, you can release equity from high-value property abroad, which may be useful if you have a second home, holiday property, international buy-to-let investments or trophy property in a foreign country.
Bridging loans are flexible in the sense that they don't only need to be used for a specific purpose, in the way a mortgage can only be used to buy property, for example. Provided you have a quality asset, can document why you want a loan, how you will manage funds, and you have a solid exit plan, lenders can consider offering this type of finance in almost any scenario. Whatever your reason for borrowing, you will almost always benefit from a tailored loan that is structured to your requirements and negotiated to get the best rate and terms available, arranged via a broker.
Portfolio finance also offers another route to raising significant capital quickly without having to sell your securities in order to raise liquidity. Lenders are used to moving fast, and can assess your securities and suitability for a loan and quickly. Again, you can use securities-backed finance in many different scenarios – from diversifying investments to buying property and everything inbetween. You can use venture capital funds, private equity, investment funds, mutual funds, hedge funds, liquid portfolios and stock, pre-IPO stock, bonds, stock in private companies and a single line of stock as collateral for this type of loan.
Luxury asset finance can be used in two ways: to raise the liquidity you need to buy luxury assets, or to unlock capital tied up in luxury assets you already own without having to dispose of them. Disposing of luxury assets means you can’t benefit from any potential appreciation of the asset in the future, and it is also time-consuming as they don’t always move off the market quickly, which may be challenging if you need to access capital quickly to make something happen or cover a short-term but non-critical funding gap.
We can arrange finance against car collections, art, jewelry, aircraft, and yachts, as well as in more niche areas: against wine, watch or jewelry collections, for example. Arranging luxury asset finance is something of a niche area – specialist lenders operate in this space, and they are discerning. Your plans for using the loan capital, how you manage the funds and your exit will all be scrutinised carefully, as will the quality and provenance of the luxury assets you want to put forward as collateral.
Today, most high-net-worth individuals have global assets and investments, be these in the form of securities, property or luxury assets. You may also be globally mobile, an expat, or want to raise capital for investments abroad rather than in your country of residence. While these scenarios are increasingly common, it’s still challenging to raise finance in any situation where there is any kind of cross-border elements if you are operating alone. This can be due to the unusual nature of the collateral (stocks listed on a small foreign stock exchange, for example) or because location you want to deploy the loan outside of your country main country of residence (i.e., releasing equity from a prime French property to consolidate existing debt in the UK). As a leading debt advisory firn, can arrange bridging loans, securities-backed lending and luxury asset finance in scenarios where these is any kind of international or cross-border element, facilitating your access to significant loans and negotiating them to ensure they are the most competitive on the market.
The value of the collateral you put forward, your financial situation, reason for borrowing and exit will – amongst other things – define how much you can borrow. Lenders offering securities-backed loans, bridging finance and luxury asset finance (each will be a specialist in their own area) can all offer very significant loans, but they will underwrite them on a case-by-case basis.
Bridging lenders typically offer around 60-75% LTV as standard, but there will be caveats and if you have especially ambitious plans or an unusual situation, they may offer less. Alternatively, we may be able to negotiate a slightly higher LTV in certain scenarios, especially if you are what a lender deems to be a very high-quality borrower with plenty of liquidity.
Similarly, in securities-backed lending and luxury asset finance deals, what you can borrow will depend on the securities or assets you put forward as collateral. 50% LTV is relatively standard in the current market, although a little more or less is sometimes possible, again, depending on your financial situation, background, plans and exit. Especially with securities-backed lending it is always important to consider LTV carefully, as a lower LTV will make you much less likely to incur margin calls, which is always to your advantage.
Enness does not give advice on Securities Backed Lending or Luxury Asset Financing, and lender introductions are unregulated. This guide is for information and illustrative purposes only and nothing contain within should be construed as advice or a recommendation and is not an invitation to buy or sell securities.
Financing options available to you will depend on your requirements and circumstances at the time. Any changes in your circumstances, any known likely changes, or omissions in the information you provide can affect the suitability of the options available to you. These should be communicated to us as early as possible.
If you are considering securing debts against your main home, such as for debt consolidation purposes, please think carefully about this and consider all other options available to you.
Your home may be repossessed if you do not keep us repayments on your mortgage or other debts secured on it.
Islay Robinson, a founder of Enness, is widely regarded as one of the UK's leading mortgage brokers. He has been instrumental in delivering some of the most complex and high value mortgages in the UK.