A client recently sought my help as he was looking to refinance one of his properties, in order to release equity and fund a new business venture. He was a French national and non-domiciled resident in the UK, who had achieved great acclaim in the communications industry, before founding a number of his own companies.
My client’s property portfolio was significant and comprised of around 10 properties located in France, the UK, Canada and Morocco. The property in question which he was looking to refinance, was a luxury villa in the South of France, valued at €13million. My client had already taken a loan against the property at a total amount of €4.2million, however was not happy with his current terms (1.9% + EURIBOR). Despite having significant assets with his original lender, he was actively searching for a much more competitive deal, as well as a new private banking relationship.
With a view to release equity from his French property to grow a new business venture, my client was looking to secure finance for a total amount of €6.2million.
This was a particularly tricky case, as although my client had no issue with moving across assets, he wanted the finance secured quickly, and at a very competitive interest rate. I thus decided not to look at local French banks who tend to be aggressive on asset under management (AUM) levels, but instead searched for blue-chip lenders with more suitable AUM requirements, who had the ability to move quickly and price keenly.
I also needed to find a lender who was happy to allow my client to put his AUM in place after the loan was drawn down, and not before. This was because some of my client’s AUM was being brought across from his existing lender, whose loan needed to be refinanced before he could remove the assets which he held with them.
With all circumstances considered, I approached a private bank with whom Enness have a very strong relationship with, and could fulfil all my client’s requirements and more. This particular lender required my client to hold 50% of the loan amount as AUM, could offer an extremely competitive interest rate, and had the capacity to move rapidly from application to completion.
The lender was also extremely proactive in offering a myriad of solutions as to how my client could structure his deal; they provided an illustration for the €6.2million in euros, another for the same loan in Swiss Francs (which was extremely cost effective), and a final illustration showing a loan amount of €13million. In this last illustration example, the private bank would take a charge over the whole property and thus mitigate the client’s wealth tax obligations.
In light of these very generous options, the lender also came to the table with a plethora of offers for my satisfied client to consider:
- 1.46% five-year fixed rate, interest only loan for the full €6.2million, with €3.5million AUM requirements
- OR 0.95% five-year fixed rate, interest only loan at 6.7million CHF loan amount, with €3.5million AUM requirements
- OR 1.46% five-year fixed rate, interest only loan for the offered €13million loan amount, with €10.3million AUM requirements (€3.5million of which must be fresh assets)