Securing £7.5 million for foreign national clients through complex, dry lending facility

What was the situation?

My clients are an extremely wealthy couple that had accumulated most of their asset base prior to arriving in the UK. They were UK residents but domiciled in the US with one major asset in the UK being an unencumbered prime central London townhouse.

Due to a sensitive change in personal circumstance, my clients were in search of a second London property for owner occupied use. Once a property was found, an offer had been agreed just under £4.5m, but speed was of the essence. Their intention was to secure financing over their existing home and against the property being purchased, alongside carrying out various home improvements.

The clients offshore bank was unable to assist with the loan conditions they required and therefore suggested they speak with LDN Finance given the proven track record of supporting previous similar projects.

What was the issue?

This was a complex situation because despite the clients being UK residents, they were foreign nationals who were holding their wealth in overseas investment accounts. As such, the issue was not that they couldn’t prove their wealth and finance for the purchase, but instead they had been advised by a recommended tax specialist that they could face significant tax liabilities by remitting funds onshore.

Given the time sensitivity around closing the property purchase, I needed to come up with a competitive solution that could be processed swiftly.

A further quirk to this proposal was that whilst my clients had previously held executive positions, they were no longer working and therefore relied on overseas investment income and capital gains. Whilst the level of incomes being received were not insignificant, they were not at the level that would typically be required to service a £7.5m mortgage facility.

Given most traditional banks have regulatory requirements to evidence standard income which ideally will be GBP denominated, this presented a further challenge to satisfy lenders’ stringent affordability calculations.

What was the process?

To raise the capital needed for the purchase and home improvements, I needed to source a facility with a bank that could offer competitive terms in respect of interest rate and fees. I also ideally wanted to find a lender who wouldn’t require the borrowers to place any assets under management to begin a relationship.

The key was to show sufficient liquidity in the UK to be able to service the new mortgages. To support this, I provided a demonstration of the clients wider overseas asset position and ability to draw upon these assets, as a contingency should they ever be required.

The deal involved raising funds from the clients existing home swiftly to allow exchange of contracts to take place on their onward property purchase. I was then able to raise a smaller mortgage against the new purchase to ensure the clients had some liquidity set aside to fund the necessary home improvements.

By utilising new debt, I was able to help my clients avoid remitting funds onshore creating a significant tax liability.

What was the solution?

Overall, I was able to secure a bespoke facility that included raising debt against both the borrowers current UK home and partly against the property being purchased. The debt was sourced on a part fix and part variable margin with the former priced in at 1.84% and the latter at 1.39% plus Bank of England base rate.

The facility was structured on a dry lending basis meaning the bank was happy to lend without expecting any wider relationship on day 1.

We were able to move quickly in sourcing a lender that could deliver and ultimately ensure the borrowers could complete on their new property purchase, which had the time pressures associated with it.

The clients were thrilled with the solution I created for them, and this has also further strengthened our relationship with the overseas private bank that was unable to assist, paving the way for similar opportunities to support them in the future.

Lending solutions with LDN Finance

Are you a HNW foreign national with a complex income structure, looking to purchase a residential home in the UK?

At LDN Finance, our specialist team has extensive experience in securing short-term finance solutions suited to your circumstances – no matter the complexity. Working closely with our trusted network of private banks and specialist lenders, we’re sure to secure a bespoke arrangement for your project at competitive, market-leading rates.

Get in touch with us to organise an initial consultation.