When it comes to high net worth individuals, their financial situations are often so complex that they need a mortgage adviser with several decades of experience in the industry. Step forward one of our most experienced advisers, Nigel Bedford.
Our client had recently purchased two new build, high rise flats in Central London. A cash buy, they were an addition to the client’s buy to let property portfolio and were bought in two SPVs – aka special purpose vehicles. These structures are usually limited companies and, in real estate, they’re created for the purpose of purchasing a property and ‘ringfencing’ that asset from other aspects of an individual’s business interests. As a limited company, they can also provide tax advantages which have been eroded with individual ownership of BTL investments.
The cash to purchase the buy to let properties came in the form of loans from our client’s trading company and they had now decided to refinance these loans and put the money back into the trading company. With a combined value of just shy of £1.6m the mortgages represented a 65% loan to value on the properties, making the LTV acceptable to a lender. However, the issue came in the fact that the rental coverage from the prime Central London apartments was insufficient to meet the affordability criteria for the loan. An additional layer of complexity was added because the two SPVs were owned by a family trust registered in the Isle of Man. Whilst our client was high net worth, their business interests had been affected by the COVID crisis and therefore the situation represented multiple challenges.
Nigel identified a potential offshore private bank and banker who understood the complex offshore ownership structure of the SPVS and was willing to accept a refinance of properties purchased less than six months prior. The bank was also happy to hold a cash deposit to cover the shortfall in their rental coverage calculations as security. Nigel secured an incredibly favourable rate across a five-year term with no early repayment charges, allowing our HNW client to adapt quickly to suit the future needs of their business and property portfolio.
If you’re dealing with a complex finance or refinancing situation, don’t hesitate to get in touch with our team of experts to help you navigate your next steps.