I recently secured a property purchase for entrepreneur deal so my client could buy a new family home worth £1.1 million. He wanted to borrow as much as possible, which amounted to a loan of £750,000.
This client was currently renting and owned a small buy to let property in the background. He had just sold his previous company to start a new one and was sitting on a substantial amount of cash. However, his new company had been trading for less than one year, which meant he could not evidence one year’s worth of accounts to a lender – the minimum requirement for every lender on the high street. Because of this, I needed to source a lender that would be willing to consider my client in his own right, taking his overall wealth into account.
Luckily, business at his new company was going very well, so he could demonstrate affordability. This allowed me to place his case with a private bank that was prepared to offer five year’s interest only up to 65% loan to value.
In order to make the lender comfortable with his affordability, they accepted five year’s interest payments upfront to service the loan. This is to be reviewed each year, with the opportunity to remove the requirement once he can demonstrate his affordability in full.
Private banks usually require Assets Under Management (AUMs), which my client could not provide because his cash was going towards the purchase and the rest on demand for the business. I was, therefore, able to negotiate this and the lender was happy to accept a reduced AUM of £250,000.
I secured this at a rate of just 3.58% with a 1% arrangement fee. My client was extremely happy as this allowed him to purchase the home for his wife and make his mortgage payments cheaper than the rent – something that he previously thought impossible.