I was approached by a 67 year old client who owned an £8 million residential property with no mortgage. She was a retired borrower needing 3 million pound large mortgage against her main residence in order to help generate an income, invest in property and to fund the interest payments on the loan.
I agreed a £3 million facility with a private bank. £1 million of this loan is earmarked to purchase an offshore bond to provide income to the client and a further £1 million will be retained by the bank as assets under management. The bank will manage the assets with the aim of covering the cost of borrowing. Any shortfall is to be funded from the capital.
The final £1 million is to purchase two investment properties. The client’s intention is to buy two properties at around £1 million each, with a further buy to let loan of around £550,000 to be secured on each property. The rental income from these properties should be sufficient to repay the two ‘buy to let’ mortgages within 12 to 15 years at which point the client will sell these properties and repay the £3 million loan on her main residence.