£5M Interest-Only Remortgage on London Property Held in Offshore SPV

• Client: High-net-worth individual with a UK property portfolio held through an offshore SPV
• Property: Five-bedroom detached property in St John’s Wood valued at approximately £12.75 million
• Challenge: Existing lender was unwilling to renew the facility due to the offshore ownership structure, while the property’s rental income did not meet standard stress-testing requirements
• Finance: £5 million interest-only mortgage at 39.2% LTV over five years

Remortgaging a high-value London property held through an offshore special purpose vehicle (SPV) can present additional challenges, particularly where the borrower has complex international income and the existing lender is unwilling to continue the facility. Enness was approached by a high-net-worth client looking to refinance a property in St John’s Wood valued at approximately £12.75 million.

The five-bedroom detached property was held within an offshore SPV alongside other London properties in the client’s portfolio. The client was looking to refinance an existing £5 million facility after the current lender indicated that it would not renew the loan because of the offshore ownership structure.

The client had accumulated significant wealth through a successful business career and had built a substantial property portfolio across the UK and internationally. However, their financial circumstances were complex, with income originating from multiple sources and jurisdictions.

There was also a challenge around the rental income generated by the property. The rent did not meet the standard mortgage stress-testing requirements that many mainstream lenders apply when assessing buy-to-let affordability. Combined with the size of the required £5 million facility, this significantly reduced the number of lenders likely to consider the application.

The offshore SPV was another important consideration. Many mainstream lenders are reluctant to lend against properties held within offshore structures, particularly where there are additional layers of ownership or trust arrangements involved.

Enness therefore identified private banking as the most appropriate route. The London team approached a private bank with experience of high-net-worth clients, complex income structures and offshore property ownership.

The client’s wider financial position was presented to the lender on a holistic basis. Rather than relying solely on the rental income from the individual property, the lender considered the client’s overall wealth and broader income streams. The bank was also comfortable with the property remaining within the offshore SPV structure.

Following negotiations, Enness secured £5 million of interest-only mortgage finance against the £12.75 million property, representing approximately 39.2% loan to value (LTV). The facility was arranged over a five-year term at a variable rate of 2.75% above the Bank of England Base Rate at the time.

The mortgage also provided flexibility, with no early repayment charges, allowing the client to retain the option of selling the property or restructuring the borrowing in the future.

The case demonstrates how remortgage finance can be structured for high-net-worth borrowers with complex ownership arrangements and international income. Where mainstream lenders are unable to accommodate an offshore SPV, private banks may be able to take a broader view of the borrower’s overall financial position, subject to their individual criteria.

For clients looking to refinance substantial London property portfolios, specialist large mortgage expertise can help identify lenders able to consider complex ownership structures, significant borrowing requirements and bespoke repayment arrangements.

Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, valuation, property suitability and lender criteria. Terms, rates, LTVs, fees and availability may vary depending on individual circumstances.

Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise. Interest-only mortgages require a suitable strategy for repaying the capital at the end of the mortgage term. Property investments can be illiquid and may take time to sell. Where property is held through an offshore structure, borrowers should obtain appropriate legal and tax advice regarding the ownership and financing arrangements.