2 Million Pound Plus Mortgage

THE SCENARIO

I was approached by a client looking to purchase a new main residence in Buckinghamshire. My client worked for an investment management company in the City and had accumulated significant wealth despite only being 37 years old.

He wanted to borrow £2.5 million on a property valued at £3.8 million (66 per cent loan to value) and thus needed a 2 Million Pound Plus Mortgage. He had already approached his own bank who had offered him terms at 2.49 per cent over Bank of England Base rate. However, he believed he could get a better deal which is why he approached me.

While my client’s deposit was from his own savings, his income was sufficient to cover a loan of £2.5 million and he owned a London property worth £1.4 million outright, he did not fit the lending profile for many private banks. This was because he was using most of his cash savings as the deposit for the purchase and did not have a SIPP or other assets he could transfer to the management of a private bank.

In this case, the challenge was to present the client to the lender to take a long term view about the relationship even though they could not manage any assets immediately. We manage to convince the lender to see the earnings potential of my client which allowed them to offer terms.

OUR SOLUTION

However, I managed to secure him the loan he required at a rate of 1.75 per cent over 3 month LIBOR on a pure interest only basis. In addition, the lender would ordinarily charge a rate of 2 per cent over LIBOR for this type of large mortgage. However, because of the close relationship Enness Private Clients have with this bank, I was able to negotiate better lending terms for this high value mortgage client.

Overall, my client saved around £18,500 per year in interest charges against what his own bank were quoting. He also saved around £6,000 per annum compared to the rate the lender would ordinarily have charged without my involvement.

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