- Requirement: Buy-to-let refinance on a high-value Mayfair property
- Borrowers: Retired, UK-based clients
- Property: Mayfair investment property valued at £1.25m
- Mortgage Balance: £650,000
- Considerations: Rental income only, limited taxable income and an eight-week refinancing deadline
Enness was approached by UK-based retired clients who owned an investment property in Mayfair, London. The existing mortgage was due to expire within eight weeks, and the clients were unable to repay the outstanding balance within that timeframe. They therefore needed a suitable refinancing solution that could be arranged quickly while taking their wider financial circumstances into account.
The clients generated their income exclusively from rental properties, owning three investment properties in Prime Central London. Although they had significant wealth and an offshore investment portfolio, they did not have other sources of personal income. This presented a challenge from an affordability perspective, particularly as their rental and mortgage commitments across the three properties amounted to at least £20,000 per month.
The situation was further complicated by the way one of the properties was operated. One of the London properties was used as a holiday let, which allowed the clients to offset a significant proportion of the rental income for tax purposes. While this was beneficial from a tax perspective, it meant that their tax returns showed only limited income, making it more difficult for conventional lenders to assess the full strength of their financial position.
There was also a £100,000 shortfall on the buy-to-let refinance due to increases in lenders’ interest coverage ratio (ICR) stress calculations. Traditional topslicing was not available because the clients had insufficient excess personal income. Although their offshore investment portfolio could potentially have been used to support the application, the clients did not want to sell or transfer custody of their investments because of their long-standing relationship with their existing asset manager.
Enness identified a specialist bank that was able to use the clients’ overseas investment portfolio to evidence potential personal affordability. The lender effectively monetised a proportion of the relatively liquid portfolio for affordability purposes, allowing the required loan size to be supported without the clients needing to draw down or sell their investments.
We also negotiated a structure in which the lender did not take ownership or custody of the investment portfolio. This allowed the clients to retain their existing investment relationship while providing the lender with sufficient comfort to support the required borrowing.
The solution enabled Enness to complete the buy-to-let refinance within the required eight-week timeframe. The clients were able to refinance the Mayfair property without transferring their investment portfolio to another bank or creating the potential tax implications associated with selling or restructuring their investments.
This case demonstrates how complex mortgage solutions can be structured around a borrower’s wider wealth rather than relying solely on conventional taxable income. For high-net-worth borrowers with significant investment assets but limited personal income, specialist lenders may be able to take a more holistic view of affordability.
If you require a bespoke refinancing solution for a high-value property, Enness can assess your wider financial position and explore suitable remortgage options. To discuss your requirements, speak to a mortgage specialist.
Risk Warning:
Mortgages and secured lending carry risks. If you do not keep up with repayments, the lender may take enforcement action against the property used as security. Investment values can also fluctuate and should not be relied upon as a guaranteed source of repayment or affordability.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting, property assessment and lender criteria. Terms and availability will vary depending on individual circumstances. Enness does not provide legal, tax or investment advice, and lender introductions are unregulated.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
