Recently, a client approached me with a requirement for a £1.3 million pound mortgage with non traditional income factored in on a property valued at £2.2 million after he was knocked back by two major High Street banks – including his own bank.
While my client had enjoyed an extremely lucrative career in the civil engineering sector, he had sold his business in 2008 and had not been working in the intervening period. While he had plans for future ventures, a property in the process of being sold and plenty of available capital, he did not have any ‘income’ in the traditional sense.
I approached several private banks that were prepared to lend to this client based on his impressive CV, his capital and the fact he was expecting a further capital sum from the sale of a property asset.
I agreed a £1.3 million loan with a well-known private bank at a rate of 2.25% over LIBOR with interest payable on a quarterly basis. No early repayment charges are applicable and the loan is fully flexible, allowing my client to repay capital as required. It has also been arranged on a five year interest only basis with the client intending to repay capital on an ad hoc basis.
The private bank required the client to deposit £500,000 in the knowledge that additional funds are likely to follow on the sale of the existing property. They were happy to underwrite this application based on the client’s CV, proof of his £900,000 deposit and £500,000 capital and details of the client’s previous business and information about his plan for the future.
The bank showed that it is possible to arrange finance for a high net worth client – even if they don’t have earned income in the traditional sense. The loan is clearly affordable on an interest only basis through the client’s available capital and the planned property sale. The bank also understands that this asset sale will also generate additional funds that can be placed on deposit. All this was agreed at 60 per cent lending at an extremely competitive interest rate.