Before the financial crisis of 2008, securing a 100% loan to value residential mortgage was relatively easy. Now, there is a negative association with high street banks offering 100% finance without using family members to guarantee the loan. Enness has spoken before about how parents can help their first-time buyer children onto the ladder—but what about securing a 100% loan to value residential mortgage for high net worth individuals who already own property?
Many of our high net worth clients are keen to secure 100% finance for a residential property regardless of the fact they have the money available to put down a large deposit, to maintain their liquidity. Likewise, many clients with large personal net worth seek 100% finance for a different reason; they are illiquid, as their wealth is invested in stocks, shares and a range of other assets.
So how I can get a 100% loan to value residential mortgage?
One of the most effective ways of securing a 100% residential mortgage is a Lombard loan. A Lombard loan is a loan secured against cash or liquid assets. Lombard loans can be approved swiftly and simply against a pledge of assets that can easily be converted into liquidity – such as equities, bonds, and select life insurance policies with a surrender value. You can borrow against the deposited assets up to a certain percentage of their market value.
The applicable loan to value ratio will depend on the type, currency, quality, volatility, and tradability of the securities in question, as well as on the diversification of your portfolio, and will be reviewed at regular intervals. We are able to secure excellent terms for loans such as this—often better terms than can be arranged for conventional mortgages.
Another way of doing this is to place assets under management (AUM), enabling the bank to invest money on your behalf.
So how could this be applied? To illustrate a simple example, if you are looking to purchase a property worth £10million, £6million of this could be a Lombard loan, borrowing against shares. £4million could be placed with the bank as an investment; the money will then be actively ‘working’, and can be lent against more cheaply.
What will I need to do to secure a 100% loan to value residential mortgage?
Securing such a loan will almost certainly require working with a private bank. We have excellent relationships with a full range of lenders in the market, including private banks, and can make the appropriate introduction.
Private banks are keen to build long term relationships with clients. As a broker, I will arrange a meeting between you and the bank to create a forum for personalised discussion. I will also help you to structure your application appropriately; when applying for 100% finance.
Enness has an excellent track record of arranging 100% loan to value mortgages for high net worth customers. If you are currently looking to secure a mortgage and are interested in a 100% loan to value, please get in touch with me for a further discussion of how I can help you achieve this.