£9m mortgage for HNWI with non-standard income
The situation?
LDN Private Clients was approached by a new client who wanted to purchase a second residential home in the Hampshire countryside, in addition to their home in London. The property was a stunning 10-bedroom Georgian mansion with over 30 acres of land surrounding it.
The client required a high-value loan of £9,000,000 to complete the purchase. The transaction was off market but to complete at the desired price it needed to meet a tight completion deadline. To arrange the most suitable facility for their requirements, they contacted us for our assistance in tailoring a bespoke financing arrangement.
One of the most complex aspects of this case was the client’s income structure. Following a very successful 25+ year career in the city, the client was winding down from their work, however, they did not want to retire entirely but rather wanted something new and fulfilling. They in turn decided to explore opportunities with venture capital and start-up businesses to share their industry leading knowledge and expertise.
With an extensive wealth profile behind them, the client was able to demonstrate a strong liquid asset base from previous earnings but regular income evidence would no longer be achievable. For most main-stream lenders, agreeing to a £9 million mortgage without a stable income is typically a non-starter. However, at LDN Private Clients we work with an extensive panel of private banks who offer bespoke facilities for individual clients and we knew we could assist.
The solution?
As suspected, no high-street or main-stream lender would look at our client’s wider assets and the security on offer over standard income streams. We therefore knew we needed to present our client’s application comprehensively and seek out a lender that would take a pragmatic view. We reviewed the client’s wider asset base, career history, profile and overall lifestyle expenditure to narrow down a selection of lenders that we were confident would be keen to lend to this type of borrower.
After exploring the options available, our team identified a lender that focused predominantly on the client’s career history, property securities on offer, and liquid asset base when making their decision.
The agreed solution was a £9 million dry loan facility without the need for any assets under management (AUM). This was cross collateralised against two properties owned by the client with a combined value of £15 million (property being purchased and the clients existing main home, which wasn’t being sold). The rate was fixed for 5 years at just over 3% on an interest only basis.
A transaction of this magnitude is never without its challenges and the process itself was complex. To ensure the wheels kept turning for my client, we ensured regular communication with all solicitors, tax advisers and property agents to keep the tight deadline on track and the client’s requirements met.
In securing this for our client, it allowed them to make use of the equity in their current main home, therefore enabling the financing of a new long-term family residence rather than liquidating other assets at a time when this was not attractive to do so. The client was delighted, and a strong relationship has been formed for many more years to come.