75% loan to value (LTV)
2.8% plus LIBOR (London Interbank Offered Rate) interest-only
My client was an ultra-high net worth individual and a member of one of the ruling families in the Middle East.
He hoped to purchase a property in an exclusive London location for approximately £4.5million, with a loan to value (LTV) of 75%. This property would be used as his base when he spends time in the UK and was, therefore, his second residential home.
He wanted to purchase the property in a limited company name for tax purposes, and also hoped to secure this loan on an interest-only repayment basis.
Unlike buy to lets, in which the sale of the property can clearly be identified as an exit strategy, it is harder to justify to a lender what the exit strategy will be for a residential property purchased on an interest-only repayment basis.
In addition, we needed to complete in just six weeks—cases as complex as this usually take months to finalise.
I knew this would be a difficult case to place; for clients such as this, most lenders will restrict borrowing far below 75% loan to value, and the levels of due diligence required will generally take a long time.
However, the real challenge was not the property, but my client’s background. He did not have permanent rights to reside in the UK and was also classed as a Politically Exposed Person (PEP).
Fortunately, I have an excellent relationship with a lender I know is able to work with clients of this background. I also pride myself on my commitment to working quickly for my clients. In this instance, I worked around the clock when needed to make sure I was able to secure the right outcome.
As a result, I arranged a rate of 2.8%+ LIBOR over a 5-year term on an interest-only basis. This was an outstanding result, as many lenders would add an additional 2% on top for loans of this nature.
If you are a foreign national looking for a large interest-only mortgage in the UK, I would be delighted to guide you through your options.