What was the situation?
Foreign investor clients who had previously bought two flats in cash during the prior year, approached us and were looking to purchase another two flats in the coming three months.
What was the issue?
Prior to approaching LDN Finance, the clients purchased two properties in cash due to the length of time it took for the previous lender to underwrite the case. The clients came to us with the view of refinancing these properties and funding the investment of two new onward purchases.
All properties were held in one UK based special purchase vehicle (SPV), however, the Directors (who are 100% shareholders) were Hong Kong nationals with no links to the UK. Although finance is available to offshore investors, the rates offered are at a “premium” due to the perceived level of risk. In addition to this, the properties were all new builds, which lenders often restrict based on how much one can borrow subject to the asset.
What was the process?
Before approaching us, the clients had been offered premium rates at lower loan to values (LTV). Once we spoke with the clients, we were able to gain a full understanding on how they operate. We then reached out to a private bank we had a close relationship with. We were able to demonstrate that the clients were well-capitalised, and due to how long they had held their current SPV, we presented a business case on their behalf to be offered the rates typically reserved for UK based investors.
To save any additional cost, we were able to convince the lender to step outside their stated criteria and offer an umbrella mortgage facility. This was across all four properties, allowing them to refinance their current holding and fund the remaining two purchases. This meant the clients could undertake one set of conveyancing work and reduce the overall administrative costs of arranging these mortgages.
What was the solution?
We managed to secure the clients rates typically reserved for UK nationals, providing them with the 75% LTV that they were seeking. The clients were very impressed with the offering, as they were able to free up their capital for future onward purchases at lower than anticipated costs, which overall increased the profitability of the portfolio.