In recent times there has been an increase in the number of Iranian nationals looking to acquire (and re-mortgage) property in the UK, with many looking at full residency status. As Iran is still deemed to be high risk by lenders, income and assets held in the country are often difficult to fully utilise when arranging mortgage finance.
Over the last couple of years we have arranged mortgage finance from more than 70 different nationalities and we are certainly seeing more activity amongst Iranian nationals. Take a look at one such approach which was challenging but ultimately made for a very interesting case study.
The client was a resident in the UK and held a tier 1 investor visa which could eventually lead to permanent UK residency. A tier 1 investor visa involves the investment of a minimum £2 million into share capital/loan capital of active trading UK companies. So, even without going into major detail regarding the client’s wealth, it was fairly obvious they had significant financial backing.
Property location: Central London
Property value: £5.355m
Outstanding mortgage funding: £2.85m
This particular fundraising exercise was a re-mortgage on a central London property valued at just over £5.355 million, with an outstanding mortgage of £2.85 million. It was fairly obvious that the main challenge would be the client’s Iranian national status which is deemed high-risk by mortgage providers.
Issues to address
After sitting down with the client to discuss their finances in more detail we learnt they were worth in excess of £75 million. The majority of this wealth was built up in Iran where the funds and assets were still located. We also learned that the client owned a Dubai-based company which confirmed that most of the client’s income originated from overseas.
Wealth: Overseas wealth
Income: Foreign currency income streams
Mortgage funding: £3.2 million
Mortgage type: Interest only
LTV rate: 60%
We knew there would be issues with the client’s Iranian national status and reluctance from mortgage providers to fully utilise both overseas wealth and income. So, despite the fact they were worth in excess of £75 million with a profitable company still operating in Dubai, we knew this was going to be challenging.
The vast majority of mortgage companies were a little reluctant to offer competitive terms for an Iranian mortgage. We knew that those who were willing to discuss the situation would likely push for assets under management as part of the agreement. This is a traditional method by which private banks look to lock in a degree of security while expanding client relations. However, we were able to put together an extremely competitive bespoke arrangement which saw the client raise an additional £363,582 over and above their current mortgage.
While the LTV ratio of 60% may not look challenging on the surface, it was secured for a client deemed high-risk with overseas assets/income. We also managed to negotiate additional security in the shape of interest cover rather than the transfer of assets to the private bank in question. So, the bespoke and fairly complex solution was as follows:-
Property value: £5.355 million
Mortgage: Residential re-mortgage
Mortgage funding: £3.2 million (raising an additional £363,582 borrowing)
Mortgage type: Interest only
Mortgage interest rates: 2.9% plus 3-month LIBOR (currently 0.76%)
Mortgage term: 5 years
Monthly payment: £9,699
Early repayment charge: None
Interest cover: 6 months
AUM: None Required
We worked tirelessly with our private bank contacts to secure a “dry lend” which meant that funds were only released once the relevant paperwork had been completed. Interest rate cover of six months is not excessive, the mortgage rate was extremely competitive and the client managed to borrow funds over and above the original outstanding mortgage.
What can Enness do for you?
As we touched on above, over the last couple of years we have secured mortgage finance for more than 70 different nationalities. We often find that many of the complex cases we take on have been refused by some of our competitors. This is where our independent status comes into its own, allowing us to discuss bespoke arrangements with traditional banks, private banks and niche lenders. The fact we are able to talk to in excess of 300 different lenders gives us great scope for negotiation.
If you have a relatively complex financial situation/residency status, maybe you have been turned down by other mortgage brokers; please feel free to give us a call for a no obligation chat. We can discuss your specific situation in more detail and put together an array of different bespoke packages. As we are able to obtain real-time market rates we can also give you actual facts and figures to compare and contrast.