HNW London Property Buyer Opts to Purchase with Mortgage Over Cash

• Client: UK resident and US national
• Property: London main residence valued at £20M
• Mortgage amount: £10M
• LTV: 50%
• Interest rate: 1.8% fixed for 10 years
• AUM: None required

For high-net-worth individuals with substantial liquid wealth, purchasing a property outright with cash is not always the preferred approach. Maintaining liquidity can provide greater flexibility, particularly where a borrower has an established investment portfolio or expects to identify further opportunities in the future.

Enness was approached by a prominent individual from the financial services sector who was looking to purchase a £20M property in London as a main residence. The client was a US national resident in the UK and had built significant personal wealth through a long career in global banking before establishing their own business more than a decade earlier.

The client’s balance sheet included a combination of cash, equities, private equity and other liquid and illiquid assets. As a result, there was sufficient wealth to purchase the property outright without mortgage finance.

Despite having the resources to proceed as a cash buyer, the client decided that retaining liquidity was preferable to committing the full purchase price to the property. Using mortgage finance meant that capital could remain available for other investments and opportunities rather than being concentrated entirely in the client’s main residence.

There were also wider considerations around the client’s investment portfolio. Funding the purchase entirely with cash could have required the disposal of certain investments, while a mortgage allowed the client to retain those assets rather than making a significant portfolio allocation change solely to fund the property acquisition.

The client was therefore looking for a substantial mortgage with a relatively low LTV and a long-term fixed-rate structure. The requirement was for £10M of mortgage funding against the £20M property, representing 50% LTV.

Another important consideration was the client’s preference not to place assets under management (AUM) with the lender. The size of the transaction and the client’s financial position provided scope to negotiate a bespoke private banking solution without requiring an additional AUM arrangement.

Enness worked closely with the client and their professional advisers, including legal and tax specialists, to structure the financing around the wider objectives of the purchase. The application was agreed within 12 working days, with the valuation instructed and completed within three days. The full mortgage offer and account opening process was completed within two weeks.

The resulting facility provided £10M of mortgage funding against the £20M London property. The mortgage was arranged at 1.8% fixed for 10 years at the time, with no assets under management requirement.

The 10-year fixed period represented a bespoke structure outside the lender’s usual credit offering. The lender was prepared to extend the arrangement based on the client’s overall financial profile and the relatively conservative 50% LTV. The rate represented a margin over the prevailing swap rate at the time of completion.

The case demonstrates why a cash-rich property buyer may still consider a large mortgage rather than purchasing a property outright. For high-net-worth borrowers, the decision can involve considerations around liquidity, investment holdings, borrowing costs and the desired balance between property ownership and accessible capital.

For clients purchasing high-value London property, specialist mortgage expertise can help identify financing structures that take account of the borrower’s wider wealth and objectives. Any decision to borrow rather than purchase with cash should be considered alongside the costs and risks of mortgage finance and the client’s individual circumstances.

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, due diligence and lender criteria. Terms, rates, LTVs, fees and availability may vary depending on individual circumstances. Any tax considerations should be assessed with an appropriately qualified tax adviser.

Risk Warning:
Property securing finance may be repossessed if repayments are not maintained. Property values can fall as well as rise. Fixed-rate borrowing may involve early repayment charges or other conditions. Borrowing against a property rather than purchasing it outright creates a financial liability and interest costs, and clients should consider the potential impact of changes to their income, assets, investment values and wider financial circumstances.