HNW London property buyer opts to purchase with mortgage over cash

21st September 2020

Islay Robinson

HNW London property buyer opts to purchase with mortgage over cash
Islay Robinson

Islay Robinson

Key facts

  • Property purchase
  • £20,000,000 property value
  • £10,000,000 mortgage amount
  • UK resident US national
  • 1.8% fixed for 10 years
  • No assets under management

Our client is a prominent and well-known individual in the financial services industry and, having worked for some of the biggest names in global banking, he set up his own business over 10 years ago. During that time, he has created a very strong personal balance sheet, consisting of cash, equities, private equity and other liquid and illiquid assets.

The property was being purchased in the client’s personal name to be his main residence in London and is somewhere he expected to live for the long term.

The client’s assets and financial position meant he could have easily purchased the property in cash (in fact, doing so may have put him in a slightly better buying position). However, he decided to use a mortgage over cash for the following reasons:

  • To keep cash available and not tie it into a property so he can respond to investment opportunities
  • Without a mortgage, he would have needed to sell some equities, and doing so at that time would have not been advantageous
  • A long-term fixed rate mortgage acted as a potential hedge against future inflation
  • Having a mortgage against a main residence could provide him with future tax advantages, especially regarding inheritance tax
  • And of course – the interest rate was incredibly attractive, and borrowing would have been better than releasing cash from his business

We agreed the mortgage in 12 working days, had the valuation instructed and completed in three days and the full offer and account opening was completed in two weeks. We worked hard with the client’s advisers, especially lawyers and tax specialists, to ensure that the absolute best solution was created.

The 10-year fix which we agreed was well outside of the bank’s normal credit offering however, the lender extended the offer based on the client’s profile and the loan to value. The rate represented a margin over the prevailing swap rate at the time of completion.

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