We are often approached by high net worth individuals who have complex income streams and global assets. The general experience is that high street banks tend to shy away from complex financial scenarios while the likes of private banks and niche lenders will step forward. So, when we were approached by a wealthy UK resident looking to acquire a family home in London we began investigating the options available.
The basics of the client’s requirements were straightforward in principle but not so straightforward in practice:-
Property to purchase: Central London
Property value: £2.725 million
Mortgage funding: £2 million
On the surface this seemed fairly simple, a high net worth individual with significant assets and income. However, there were a number of issues to take into consideration regarding the location of the assets and the origin of the income streams.
After an in-depth chat with the client a number of issues arose that would traditionally have pointed us towards private banks and niche lenders as opposed to traditional banks. The issues were as follows:-
Wealth: Global investments/asset base
Income: A number of complex income streams
Mortgage type: Interest only
Mortgage interest rate: Fixed for as long as possible to protect against market uncertainty
So, we have a client with a vast array of assets, investments across the world and complex income streams. On top of that the client had concerns regarding the London property market and was looking for a fixed mortgage rate for added protection in the medium term. This was certainly going to be a challenge!
Even though the scenario would normally suggest the private bank/niche lender route we used our contacts at one of the new high street banks to structure the perfect deal. This was after careful research, consideration of other options and discussing the application in great detail with our contacts. We knew from previous deals that they were open to suggestions regarding high net worth individuals with significant assets/income streams. As a consequence, we were able to present the mortgage application in a simple and straightforward manner with a structure and term which was acceptable to the client and the mortgage lender.
Mortgage: £2 million
Mortgage type: Interest only
LTV rate: 73%
Fixed rate: 2.69%
Fixed rate term: 10 years
This case study is a perfect example of utilising our contacts in high street banks, private banks and niche lenders. It would have been easy to discount high street lenders in this particular scenario, where there were complex income streams, but our experience in previous negotiations paid dividends. The extremely competitive 2.69% interest rate is fixed for 10 years which perfectly dovetails with the client’s short to medium term concerns about the market. The interest only mortgage also assists cash flow requirements as the client was looking to embark on further investments in due course.
We were able to secure a very healthy LTV rate, competitive interest rate which was fixed for 10 years and the interest only mortgage suited the client’s cash flow requirements. Despite the complex income streams and global asset base we managed to turn around this mortgage application to completion in just six weeks. It is also worth noting that in this particular situation there was no requirement for the client to transfer investments to an “assets under management” arrangement which is commonplace with private banks.
This is the type of mortgage structure which is not readily promoted but as we were able to approach a compatible lender with a viable structure and mortgage terms, the deal was completed fairly quickly. So, if you are looking to secure mortgage funding but have a complex financial setup, please feel free to call us for a no obligation chat. We can walk you through the options, discuss the various structures and look to dovetail a mortgage offering with your exact requirements.
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