I had a new client approach me who was looking to buy a country estate in Lincolnshire valued at £2.3 million. As he was a business owner that chose not to draw profits out of his business he was looking to raise both 100% of the purchase price and stamp duty but was not sure whether this would be possible.
Although my client did not draw profits from his business he did have a number of assets – one of which was a share portfolio of £1.5 million. I managed to source a private bank with whom I have a relationship that would lend against this share portfolio and property in order to raise a total loan of £2,461,000. This was enough to cover both the property price and the stamp duty.
Interestingly, interest only mortgages are more readily available for second home mortgages as the expectation is that the second property will be sold sooner than the main home – this of course varies from lender to lender
A very high proportion of of our clients are business owners but many of the ‘usual’ banks have really rigid criteria which restricts the ability of borrowing when self-employed. We can usually find a way to structure a mortgage despite of this.
The private bank were happy to do this when I explained that my client chooses to leave profits in the business for re-investment and growth. This made them comfortable with the arrangement. The mortgage rate was set at 1.6% above the overnight LIBOR, to give a current pay rate of 2.07% – the loan against the client assets was set at 1.4% above the overnight LIBOR, to give a current pay rate of 1.87%. This well suited my client’s requirements.