£6m country home refinance for client with complex income structure
The situation?
I was approached by my clients who resided in the UK, but received income denominated in multiple currencies. They were looking to refinance and release equity from the family’s main home to replenish funds that were previously used to acquire the property.
The property comprised of the house, vast acreage, outbuildings and paddocks. It had been purchased in cash on the back of a separate business sale at a discounted rate.
When we spoke, the clients needed to complete within three weeks and therefore decided to purchase the property in cash. They wanted to replenish their personal funds by taking on a mortgage. The property value was just over £6m, and the clients wanted to raise 70% LTV.
Firstly, the main issue I faced when sourcing a facility was the clients preference of a high-street lender, therefore avoiding private bank fees and associated costs. The challenge with this however was going to be largely linked to the clients complex income package coupled with the many quirky features of the subject property which typically a high-street lender may be uncomfortable with.
My client was a senior finance executive receiving healthy bonuses. The latest years bonus figure was 35% higher than the previous years, so I needed to ensure a lender would take a view on incorporating the latest years figures when looking at their affordability calculations, rather than a typical 2/3 year average.
Furthermore, the clients total compensation package was paid in a foreign currency so this added a layer of complexity for the lender. I needed them to take a favourable view and restrict the FX haircuts to ensure we could showcase enough earnings to meet the loan amount requirements.
In order to present a comprehensive application to the lender, I created a detailed fact-find exploring the clients personal circumstances, financial profile and property details. I provided a history of bonuses dating back 5 years, coupled with an explanation of why the latest years was that much higher.
On the property front, I provided a full breakdown of property particulars. It included a full explanation of how the outbuildings were being used and the clients lack of desire to turn the paddocks into working stables, so to keep the property completely for residential and not farming use.
The solution?
Using strong negotiations skills, there were a few hurdles to overcome but the client profile was strong, and using my long-standing lender relationships I was able to have conversations to thoroughly demonstrate the clients situation.
I was able to achieve a discounted variable rate that was priced more competitively than comparative fix rates which suited the clients requirements.
I achieved refinancing with a building society who were able to take a pragmatic view on all of the above circumstances. This was at 70% loan to value (LTV), with 50% of the balance on interest only, the rest on repayment. This released funds to the client in order to replenish previously used funds.