In turbulent markets, there is often significant demand for liquidity. Debt is one of the best ways for high-net-worth individuals to access capital quickly to solve challenges and pursue time-sensitive opportunities.
We were recently approached by a client that wanted to raise capital to finance a further business venture that presented a unique opportunity in the current market. The client had worked with us before and is a high-net-worth individual who has generated wealth through a series of successful businesses and property investments.
We suggested raising debt via a second charge against the client's primary UK residence in an unregulated financing deal. Raising debt against a main residence usually counts as regulated finance. However, because the initial finance used to buy the property was unregulated, and the client wanted to use the loan capital to pay off a business loan, solving a supply chain disruption, we could arrange for an unregulated refinancing loan, which offered more flexibility for the client.
Second-charge loans are a niche part of the market, and not every lender offers this type of finance. The lenders that can provide second-charge loans consider the borrower, financing requirements and use cases exceptionally carefully and only accept some applications. We, therefore, needed to present a detailed, factual and water-tight case to the lender to ensure they understood what our client wanted to achieve, how the loan capital would be deployed and managed, and the exit plan. We successfully arranged an in excess £1.25 million part-and-part interest-only loan, fixed at 1.25% for a 24-month term. The refinance allowed the client to raise the capital needed to pay off the business loan and become the US market leader in their perspective industry.