At Enness, we pride ourselves on our ability to provide global solutions with an integrated approach for clients from all over the world. However, it is no understatement to say arranging property finance in London for those who have no active links to the UK can be extremely difficult at the best of times. This particular case revolved around a stunning terraced house in the prime London residential area of Chelsea; the client was looking to refinance the property onto a new buy to let (BTL) facility in order to move his main banking relationship to a new Swiss bank.
The client was a high net worth (HNW) Singaporean business owner with no active links to the UK who had been introduced to Enness by a leading Swiss private bank due to his complex circumstances. As previously noted, the client wished to refinance a £6.5 million terraced house in the heart of the London Borough of Chelsea on to a new BTL mortgage as the property was now being let out and receiving rental income, as well as allowing him to change his main banking relationship to a new Swiss bank.
The headline client scenario was as follows:-
Client: HNW business owner with no ties to the UK, based in Singapore
Income: High-value annual income (USD), with a strong asset portfolio
Property value: £6.5 million
Existing loan: £4.55 million
Property Location: Chelsea, London
Property Type: Terraced house in a prime location
LTV required: 70%
Mortgage type: BTL
Despite the client’s status as a successful high net worth individual, there were some considerable obstacles we had to overcome in order to deliver the client with the best possible rate for his BTL remortgage in the UK.
ISSUES TO ADDRESS
Aside from the fact that the client has no link to the UK, there were some other issues in this scenario which made this case very complex. Chiefly, the client was looking for a BTL remortgage at 70% Loan-to-Value (LTV); most lenders in the UK do not provide high LTV financing against BTL properties if the loan exceeds £3,000,000 – in fact, they very heavily restrict them. In addition to this, the client wanted to limit the number of assets under management (AUM) placed with the new bank – something which many private banks would require for a loan of this nature.
To summarise, the key issues in need of address were:
No active link to UK: Many lenders uncomfortable with
Loan Amount: 70% LTV – generally considered too high for a BTL remortgage of this size
Limited AUM: Client reluctant to place a high amount of AUM with a new bank
In order to navigate the issues surrounding the request for a high LTV, we had to think laterally and find a lender that would do pound for pound remortgage which meant 70% LTV (circa £4.5 million) on a valuation of £6.5 million.
After taking this bespoke approach to the client’s situation, we were able to recommend two possible solutions for progression from two lenders in our extensive network:
LTV ratio: 70%
AUM amount: No AUM required, loan based purely on a strong rental income of the property
Mortgage type: Interest only
Mortgage rate: 2.50% plus 3-month LIBOR (currently 1.8%)
LTV ratio: 60%
AUM amount: No AUM required – client would need to make down payment on the loan (£650,000)
Mortgage type: Tracker mortgage (Bank of England)
Mortgage rate: 1.64% above the Bank of England base rate (2.39% all-in)
Both mortgage options came with a 1% arrangement fee (which can be negotiated in some cases) as well as no early repayment charges (ERCs), which granted flexibility if the client ever wanted to further remortgage or sell the property.
WHAT CAN ENNESS DO FOR YOU
Over the last few years, we have seen a growing number of foreign nationals looking to secure property finance in the UK for a variety of projects. As Enness is an independent mortgage brokerage, we have access to more than 300 different lending institutions across the market. Traditional mortgage lenders would be highly unlikely to consider the above scenario, and therefore our relationship with niche lenders proved invaluable in order to provide the client with viable options for his London BTL remortgage.
This type of scenario is becoming more and more commonplace in the UK. If you are faced with a similar situation, we would welcome the opportunity to discuss your requirements in more detail. As we specialise in bespoke mortgage funding, we can create a structure that best accommodates a client’s underlying financial position. Access to real-time market rates ensures that we can provide you with a range of suitable options/structures so that you can compare and contrast cash flow requirements.