- Client: High-profile Middle Eastern family with four family members investing jointly
- Property: London property valued at £1.25 million
- Challenge: Overseas clients with limited UK footprint, trust-derived income and a potentially politically exposed profile
- Finance: £875,000 mortgage at 70% LTV, at 2.5% plus three-month LIBOR over a five-year term
International investors can face additional challenges when looking to expand their UK property portfolios, particularly where their income is derived from overseas assets or structures. Enness was approached by four members of a high-profile Middle Eastern family looking to increase their exposure to UK property.
The family already had property interests in the UK, which provided some established financial and property connections to the country. However, the proposed acquisition still presented a number of challenges due to the clients’ overseas residency, the source of their income and their potentially politically exposed status.
The property they were looking to acquire was in London and valued at approximately £1.25 million. The family wanted to maximise the amount of mortgage funding available against the property in order to expand their existing UK property portfolio.
The clients’ income was generated through a private trust with a portfolio of property investments in the Middle East. While the level of income available to support the proposed borrowing was sufficient, the source of that income required careful consideration by prospective lenders.
The family’s potentially politically exposed status created an additional layer of due diligence. Lenders would need to understand the source of wealth and income, as well as the structure through which the income was generated. The fact that the clients were based overseas and had no individual UK footprint also reduced the number of lenders likely to consider the application.
Given the combination of overseas residency, trust income and potential PEP considerations, a conventional high-street lender was unlikely to offer the flexibility required. Enness therefore focused on private banks and specialist lenders with experience of working with clients from the Middle East.
The objective was not simply to identify a lender willing to consider the application, but to create sufficient competition between suitable lenders to negotiate the most appropriate terms for the clients.
Following detailed discussions with a number of lenders, Enness secured mortgage funding of £875,000 against the £1.25 million London property. This represented 70% loan to value (LTV).
The mortgage was arranged on a variable interest rate of 2.5% plus three-month LIBOR over a five-year term at the time. The structure provided the family with the maximum funding required to proceed with the acquisition and continue expanding their UK property portfolio.
The case demonstrates how private bank mortgage finance can provide flexibility for international clients with complex wealth and income structures. Where income is generated through an overseas trust or property portfolio, and the borrower has limited UK connections, lender selection and the presentation of the wider financial circumstances can be particularly important.
For Middle Eastern investors looking to acquire UK property, specialist international mortgage expertise can help identify lenders familiar with overseas income, trust structures and cross-border property investment, subject to individual circumstances and lender criteria.
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.
Risk Warning:
Property securing finance may be repossessed if repayments are not maintained. Property values can fall as well as rise. International property finance can also involve additional considerations relating to overseas income, currency movements, trust structures and changes in lending conditions.
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.
