Even fifteen years ago, a "high-risk industry" used to encompass a small number of relatively predictable activities such as gambling, tobacco or defence. Today, the business landscape is different. "High-risk" companies are considerably more common, the players are smaller, very profitable and their products or services are far more mainstream. A high-risk industry can range from the mainstream but relatively new such as crypto and blockchain.
When securing a mortgage becomes challenging, entrepreneurs are obliged to use to cash to buy property. They will often have to liquidate investments or dispose of assets to generate the necessary capital to do so. This is not always the preferred scenario or the most efficient way of purchasing a property from a fiscal, personal or planning perspective.
We recently assisted a client who had built a blockchain and made his wealth with a cryptocurrency. The client was a UK national and resident, and was looking to purchase his main residence. Located in prime central London, the property was valued £7.87 million and the client was looking to borrow 70% of the property price.
To successfully broker a mortgage in these cases, the devil is in the detail. Banks tend to look at these entrepreneurs and their businesses as a single unit. The key to unlocking a mortgage or property finance is helping the lender understand and evaluate the risks and merits of the borrower separately from those of the business – making a fortune in a high-risk industry does not always translate to being a high-risk borrower.
In this case, we were able to quickly source a lender that could deliver the perfect solution - a 70% LTV mortgage with a variable rate of 2%, plus Bank of England base rate. Here at Enness, we broker million-pound-plus mortgages in the UK and overseas for HNWI entrepreneurs who have generated their wealth from a high-risk business or industry. To discuss your scenario, get in touch today.