Utilising NYSE Stock Line as Securities-Backed Lending for Property Finance
The situation?
I was approached by two seasoned financial executives seeking to raise capital for the completion of a home renovation project. Both clients had previously earned substantial incomes but had recently transitioned into new careers, resulting in a significant reduction in their current earnings.
The clients were in the midst of an extensive refurbishment of their family home in Surrey. However, escalating costs of labour and materials pushed the project beyond their initial budget. At the time, they were benefiting from a favourable 5-year fixed-rate mortgage, but early exit penalties applied. With their income now diminished, liquidating their existing assets to fund the project would have eroded any potential gains.
Raising the necessary funds through a traditional mortgage posed a risk to their current low-interest rate, and more critically, their current income levels did not support additional borrowing. This placed them in a challenging position, as the ongoing construction required immediate financial attention, and they needed to maintain stability for their young family.
Recognising the limitations of conventional mortgage solutions, I considered alternative financing options, leveraging the clients’ broader asset portfolio.
Drawing on my extensive experience in securing financing for high-net-worth clients with complex and non-traditional income streams, I identified a unique opportunity outside the typical mortgage framework. I secured a £500,000 cross-currency credit line against a single stock position held by the client, which was listed on the New York Stock Exchange (NYSE).
This solution allowed for a 75% loan-to-value (LTV) ratio over a 3-year fixed interest term. The loan servicing was primarily supported by the dividends generated from the stock, minimising the financial burden on the clients.
The solution?
The clients were extremely pleased with this innovative approach, which provided an asset-based lending solution tailored to their specific financial situation. We successfully raised the necessary funds to complete the renovation without disrupting their existing mortgage or jeopardising their relationship with builders and developers.
Furthermore, by working efficiently with the lender, I was able to expedite the process ensuring the funds were made available to the clients within a 3-week period.
This case exemplifies the importance of creative financial solutions, particularly when traditional methods fall short. By thinking outside the box, we were able to deliver a successful outcome that aligned with the clients’ long-term financial goals.