What was the situation?
I was recently approached by my ultra high net worth (UHNW) entrepreneur client who was looking to borrow £5.5 million on £8 million for their new family home in Jersey. The client wanted to relocate and upsize their primary residence, but retain their existing property in London. Given Jersey is a more tax efficient location, it made sense for the client to develop their yet-to-make-profit start-up company from there, as opposed to London.
What was the issue?
Due to the new nature of my clients new business, and therefore lack of profit, we were presented with a few difficulties upon inspection. Despite their UHNW status, I had to present their complex case in a way that would provide the lender with confidence in my clients financial position. I did this by explaining that their prospective business plan posed my client as a more than reliable client for their desired loan.
Although there was a lot of investment for the business and a lot of people with high profile behind the brand, my client’s income did not pass the standard assessment. Thus, securing this large loan required a more creative approach.
The challenge we encountered was that we needed to get a lender to take a view on the business profile and plan; where it is going, who is involved and the projections of the business, as opposed to its current status. We needed to not only lean on the background profile of the client, but also the trajectory of the business, including who is around it and who is investing in it.
What was the process?
Due to the particular nature of this case, we endured a fairly extensive process. To get a lender to allow for this creative strategy towards securing the loan, I had to go through a newly launched local bank. Despite this particular setup not being something advertised by many banks – including the chosen lender – my close relationship with the bank successfully gave me an inroad to complete this more complex deal with them.
In securing this deal, we largely relied upon the business prospects and early stage growth, as well as the family trust in the background. Even though we were not going to offer anything up from the family trust as collateral, the extremely high level of money, investments and properties within my UHNW client’s family company proved a worthy demonstration of exactly the type of client I was bringing to the table.
To overcome the standard affordability calculations, we put some interest on account. This demonstrated that my client was able to service the loan over the years. However, to tackle the issue surrounding the newness of his business and lack of his initial income, I had my client frontload five years’ worth of interest payments – this gave the bank comfort and confidence that they would receive payment for that duration, whatever my client’s future financial circumstances.
What was the solution?
Overall, I secured a £5.5 million mortgage on a five-year fully interest only deal with a five-year fix rate at around 2.00%. The fantastically affordable arrangement fee with the chosen Jersey-based retail lender bank was only £5,000 and as a result, my client was overjoyed with this incredibly bespoke agreement.
Not only has this transaction allowed my client and their family to upsize and move to another country despite a unique financial setup, it has comfortably set them up to grow their start-up business with its extremely high valuation and future endeavours.
Lending solutions with LDN Finance
Are you a budding entrepreneur, looking to make steps in your personal and professional life? Perhaps you are looking to upsize your family home, but are encountering financial complexities. Don’t fret.
At LDN Finance, our talented and specialised brokers are the most equipped to provide you with completely bespoke and personal property finance solutions at market-leading rates – no matter how complex your circumstances.
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