I recently assisted a couple who wanted to capital raise against their London property to generate an income.
The couple were foreign nationals with an unencumbered residential property in Prime Central London, valued at £5million—they had bought the property many years previously at substantially less. My clients had a high net worth and worldwide assets, but their actual income was fairly low. They wanted to refinance to release funds from which they could actively create an income source.
My clients wanted to use the equity in their £5million London property to generate an income by investing £1million with the bank at 20% loan to value (LTV), in a portfolio, which could achieve yearly returns of around 8-10%. They also desired flexibility with the investment, with some control over where their funds were being invested. They reached out to Enness as our lender relationships mean we can negotiate for stronger terms and more flexible facilities.
Despite my client’s complex requirements, I managed to secure an excellent mortgage rate from a private bank we work with, at a rate of 1.5% plus 3-month LIBOR 0.38% (1.88%) and a five-year interest-only term. Additionally, there are no early repayment charges and they can liquidate the portfolio at any time. Due to the properties my clients owned abroad, the bank was willing to take their rental income into consideration which helped greatly to secure these terms.
This is an excellent example of the trend of high net worth individuals looking to capital raise by refinancing their unencumbered assets. Lenders have a good appetite for appealing clients like this. In this instance, the bank was prepared to take a global outlook and factor in worldwide assets when considering lending and terms, not just the UK property.
If you’re hoping to capital raise against your property, get in touch for a personalised consultation.