A problem often faced by high net worth (HNW) clients is having the background asset wealth to buy a property, but not being able to demonstrate a high enough income to support a large mortgage. This was an issue for two recent clients of mine, a married couple with a property in a desirable part of London worth £2million.
Their current mortgage was quite small, however they wanted to refinance in order to generate some more liquidity and buy an ex-partner out of the house. The wife was not currently on the mortgage, so she would be added to this to stretch the affordability further.
However, between them, they had a very sporadic and confusing income. The husband paid himself through a limited company, but his salary was mainly in the form of directors’ loans, which can be very difficult for most lenders to deal with appropriately. Meanwhile, the wife came from a wealthy background and had around £800,000 in jewellery in addition to property abroad.
Between them they also had a decent amount of liquidity and large pensions. As such, they clearly had the background wealth to support a large loan, but their income was preventing them from finding a solution.
Fortunately, I am very experienced in dealing with cases like this and felt I would be able to help. I approached a bank I have a great relationship with and clearly presented my client’s situation, background and wealth profile. I then structured the loan to be a pre-funded mortgage. This meant the clients could put down a large payment which would service the interest payments, meaning they wouldn’t actually have to use their income for an affordability calculation.
On this basis, the lender was happy to offer a loan of £1.1million on a 5-year basis. This was a creative solution for my clients and a great example of what Enness can achieve.