£1.2m remortgage to capital raise for equity investment & tax bill

A client recently approached me to complete a residential remortgage to capital raise of £1.2 million on his property in Earls Court. His property was unencumbered at the point of application, so he was looking to raise capital for the split purpose of paying off a tax bill and investing in his own personal portfolio.

As borrowing is currently cheaper than ever and property values are experiencing much slower growth, my affluent clients are now considering alternative investments strategies to complement their property portfolio. The rationale behind my client’s motive was that house prices will stagnate for a period post Brexit – especially at the higher end of the market – so he believed he could make a greater use of his capital by diversifying what asset classes he held it in.

Being a partner of a Private Equity Firm, my client was an expert in this field and confident in using these funds for personal equity investment. However, the purpose my client had for the funds is not an acceptable one for high street banks, who view this as too speculative and risky. This also applies to using funds to pay a personal tax bill which is a big no-no.

Unaware of this, my client had already tried his main bank, who were predictably unable to help, which was also the case for every mainstream lender on the high street.

OUR SOLUTION

Luckily, I have an excellent relationship with a private bank who has a good understanding of the hedge fund profession, and was willing to support a capital raise for my client’s intentions. As my client receives and income of over £300,000 a year he could easily access this type of lender and secure the right solution.

I met the client on a Thursday and had the agreement in principle by Tuesday, which was an unusually quick turnaround for a private lender. The credit approval was then received within a matter of days.