Existing clients of Enness’ – a married couple – approached me seeking a high-net-worth remortgage loan on their family home in Hampstead, North London. Their house was valued at £17 – £18 million and it had an existing mortgage of £2.5 million remaining against it with a private bank. They wanted a broker to negotiate new terms as they felt that their existing package was quite expensive, costing the equivalent of c. 4% each year.
The mortgage was coming to an end this June so they wanted to explore their options before committing to another mortgage. However, the situation was not as straightforward as just a remortgage as the couple wanted to raise additional funds from the property. They had recently extensively renovated the property using their own funds and wished to replenish their savings. They also had plans in the pipeline to make other investments.
Neither of the couple worked on a salaried basis – the husband is a retired lawyer and the wife received an income from a trust. They did however have an expansive property portfolio.
Therefore, I presented my clients with alternative options which would enable them to achieve the best terms for what they wanted to achieve, but allowed them to consider their finances from different perspectives rather than just being given one solution.
The first was a straightforward mortgage which allowed my clients to remortgage up to the £4 million level. This would repay the existing mortgage and leave surplus funds for future investment. This lender wasn’t driven by managing other assets for the clients, as some private banks are, it was instead a traditional mortgage.
The other option was to remortgage up to 50% of the property value. I was able to secure a rate of 2.25% above LIBOR. This would easily repay the existing mortgage and replenish their savings, but also provided the new lender with further assets for them to manage with a view to generating an investment income for my clients. This income could then be help fund their new mortgage, which would effectively make it self-financing if the investment performs to target.