I recently helped a married couple, who wanted the equity in their London property to generate an income.
The couple are both French passport holders in their mid-50s, and own an unencumbered residential property in prime central London valued at £5million. They also have worldwide assets and additional properties in France and Tel Aviv, however whilst their net worth is substantial, their income was fairly low.
The clients wanted the equity in their £5million London property to generate an income by investing £1million with the bank at 20% loan to value (LTV), in a high-risk portfolio, which could achieve yearly returns for my client of around circa 8-10%. They also desired flexibility with the investment and to be able to have some control over where their funds were being invested. They reached out to Enness as we can provide them a faster service on better terms than what they had been offered directly by the bank due to our strong relationships and influence with lenders.
Despite the complex wishes of my clients, I managed to secure an excellent mortgage rate for the couple, as they were offered brilliant terms by a private bank we work with, at a rate of 1.5% plus 3 month LIBOR 0.38% (1.88%) and a five-year interest only term. Additionally, there are no early repayment charges and they can liquidate the portfolio at any time. Due to the properties my clients owned abroad in Europe and Asia, the bank could take their rental income into consideration which helped greatly to secure these brilliant terms.
A similar case was recently progressed with our Private Office on the same terms as my client, implying a new trend in equity release following the market uncertainty that has plagued buy to let post-Brexit and Phillip Hammond’s recent Autumn Statement in November. This second client was also looking to release equity from an unencumbered residential property in central London worth £3million, whilst also diversifying his portfolio by investing this with the bank. The client’s parents currently own the property, however are in the process of transferring the title to him, and they too have substantial global property assets.
In both cases the bank has taken a global outlook and factored in worldwide assets when considering lending and terms, not just the UK property, and are very open to considering these investments on favourable terms.