100% loan to value mortgage for client with no income

THE SCENARIO

On paper, securing a 100% loan to value (LTV) mortgage for a client with no income seems like an impossible task. Whilst we regularly arrange mortgages for clients with unusual income structures, it is rare that we approached by clients with no income whatsoever. This is essentially a mortgage with no deposit, which is very unusual in the modern finance landscape.

 

Key figures:

£825,000 property

£6million in savings

100% loan to value (LTV)

1.5% above Bank of England Base Rate (BOEBR)

 

The client:

He had worked for a major investment bank for many years but had decided to leave his position and spend several years unemployed to spend more time with his family.

 

The property:

The property he was looking to purchase was in a desirable area of North London and valued at £825,000.

 

What were they looking for?

His extremely successful career meant that he had in excess of £6million savings in the bank. He could clearly afford to buy the house outright if he needed to. However, as we have reported before, buying a house in cash just because you can afford to is often not the most effective use of funds.

 

Why was it difficult?

Whilst we regularly arrange mortgages for clients with unusual income structures, it is rare that we are approached by clients with no income whatsoever. This is essentially a mortgage with no deposit, which is very unusual in the modern finance landscape.

My client wanted to keep his cash flow high by taking out a loan on the property and hoped to secure a large mortgage with no deposit. However, despite his demonstrable wealth, his lack of income meant this would need to be dealt with thoughtfully.

 

What was the process?

I approached a private bank who agreed to take a view on my client’s cash assets. This is one of Enness’ key strengths; in order to gain access to the private banks, you will need a broker with a strong prior relationship, which is something we pride ourselves on.

 

The solution:

After I outlined my client’s situation, this lender allowed my client to invest £1.2million with them for five years. We then arranged a Lombard loan of £825,000 against the portfolio invested. This meant my client could use the loan to buy his property—at an interest rate of just 1.5% over the Bank of England base rate (BOEBR). This essentially created a 100% loan to value mortgage as the assets he had placed with the lender would theoretically be generating an income.

This creative solution was a fantastic result for my client as it meant the funds he invested would earn a strong return, essentially paying off the interest on the loan.

 

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