£750,000 Equity Release For A Client With A Complex Background

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Key Facts

• Borrower: Finnish national/USA resident - high-net-worth individual
• Property: Prime Central London investment property worth £1 million
• Finance Requirements: Accessing the highest loan-to-value possible, no early repayment terms and accessing finance despite tax returns showing a loss
• Terms: Two-year tracker at 1.74% + base rate

In this case, we were approached by a Finnish national and US resident who wanted to raise capital to purchase a new home in America, where they reside permanently. 

The case was challenging as the client - a successful entrepreneur - reinvested much of the revenue generated through their business back into their company in order to fuel growth. As a result, they had minimal income and their tax return was showing a loss, although their business was in a much stronger position than their tax return reflected. This was hampering the client’s ability to access the capital they needed to finance their American property purchase. We discussed the client’s financing requirements and global asset base, and identified an unencumbered flat in prime central London that the client rented out that would be ideal to use as security for a loan. We approached lenders on this basis. 

Arranging mortgages and property finance for individuals who reside in, (or have links to), America can be challenging as some lenders don’t work with American nationals/residents on the basis of the more complex reporting and regulatory requirements. The case was also challenging as this was effectively a cross-border loan: a property in London would be used as security for a loan that would be used to purchase real estate in the USA. This meant we had to negotiate and arrange the loan carefully so lenders understood the client’s financial position despite their tax return, the risk involved in the deal and their plan for managing the loan. Using the client’s London property as collateral for a loan, we were able to raise a 2-year 75% loan-to-value tracker mortgage at 1.74% + base rate. We also negotiated that the client wouldn’t have any early repayment fees, allowing for more flexibility with regard to their refinancing or exit.