- Client: High-net-worth individual with substantial liquid assets but no current employment income
- Property: North London residential property valued at approximately £825,000
- Challenge: Required 100% financing despite having no current income and wanted to retain significant cash liquidity
- Finance: £825,000 Lombard loan secured against a £1.2 million investment portfolio at 1.5% above Bank of England Base Rate at the time
Arranging mortgage finance for a borrower with no current employment income can be challenging, even where the individual has substantial liquid wealth. Enness was approached by a high-net-worth client looking to purchase a residential property in North London valued at approximately £825,000.
The client had accumulated more than £6 million in savings and therefore had sufficient liquidity to purchase the property outright. However, rather than committing a significant amount of cash to the purchase, the client wanted to retain access to their capital and explore a financing structure that would allow the property to be acquired without a conventional deposit.
The primary challenge was the absence of current employment income. While the client’s substantial savings demonstrated significant financial strength, conventional mortgage lenders would generally place considerable emphasis on ongoing income when assessing affordability.
The requirement for 100% financing added another layer of complexity. A conventional residential mortgage at 100% LTV would be highly unusual, particularly for a borrower without current employment income, so Enness considered alternative ways of structuring the borrowing.
Rather than relying solely on the value of the property being purchased, Enness approached a private bank prepared to consider the client’s wider liquid assets. Following discussions around the client’s financial position, the bank agreed to establish an investment relationship alongside the proposed borrowing.
The client placed £1.2 million with the bank for a five-year period. Against this investment portfolio, Enness arranged a £825,000 Lombard loan, which could then be used towards the acquisition of the North London property.
The resulting facility was arranged at a rate of 1.5% above Bank of England Base Rate at the time. Structuring the borrowing against the investment portfolio rather than relying on conventional employment income provided a way for the client to retain their wider liquidity while funding the property purchase.
The case demonstrates how Lombard loans can provide an alternative source of liquidity for high-net-worth individuals whose circumstances do not fit conventional mortgage affordability models. Where a client has substantial investment assets, securities-backed lending may offer a way to raise capital without necessarily selling those assets, subject to the lender’s criteria and the suitability of the portfolio.
For clients with significant liquid wealth but limited or no conventional income, specialist large mortgage and securities-backed lending solutions can provide alternative approaches to property finance.
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, asset suitability and lender criteria. Terms, rates, LTVs, fees and availability may vary depending on individual circumstances.
Risk Warning:
Your property and investment assets may be at risk if borrowing cannot be repaid. Securities-backed lending can result in the lender requiring additional collateral or selling investments if the value of the portfolio falls. Investment values can fall as well as rise and returns are not guaranteed. Borrowers should ensure they understand the risks associated with borrowing against investment assets and have an appropriate strategy for meeting repayments.
Securities-Backed Lending Disclaimer:
Enness does not provide advice on investments or Securities-Backed Lending. Any introduction to a lender for Securities-Backed Lending is unregulated.
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.
