Client with complex income looking to capital raise £1.76m with additional borrowing of £1.8m

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Proposition

The client came to us through a Google search, having been told by their broker that what they required simply was not possible. They had found a dream country home through a search agent and were looking to act as quickly as possible to purchase.

The client who works in Private Equity, with a complex income structure, needed to raise capital for their deposit using the equity in their existing home which also had a mortgage on it and thus required a loan of £1.76m to pay off the existing debt and have the capital for the deposit on the onward purchase against a value of £2.35m. The client then required a standard residential mortgage of £1.8m on £2.4m to complete this purchase.

This was an incredibly complex case, with some major hurdles to overcome:

  • In order to get sufficient equity to purchase the client needed to capital raise on their existing home, known as a let-to-buy, to repay their existing loan and to provide the capital required for the deposit. They required a capital raise of £1.76m against a property value of £2.35 – well above the usual buy-to-let limit.
  • The client also required a standard residential mortgage of £1.8m on £2.4m to complete the purchase.
  • To make this borrowing affordable the client required an interest-only loan.
  • We needed to find a lender that allowed capital raised to be used as a deposit for an onwards residential purchase.
  • The lender had to work from an employer reference for latest years income (LLP yearend 31/12/19) and a 19/20 tax calculation from the CFO when assessing affordability, made all the more difficult in the midst of pandemic and with the spectre of double dip recession hanging over the economy.
  • The capital raise loan needed to be interest only for affordability purposes.
  • Both loans required were above £1.5m, loan sizes not offered by several lenders.
  • We needed a lender who allowed first time landlords.

Solution & lending facility

With access to every lender on the market and vast experience negotiating property finance of every kind, Private Finance’s expert brokers are equipped to find solutions to mortgage-related problems, even in the unique situations borrowers are currently facing due to the Coronavirus pandemic.

Our expert consultant was able to find a lender who would create a bespoke product for this client, given that it was outside of their normal BTL lending limit – this is only possible given both their knowledge of the market and Private Finances relationships with specialist lenders. The client was able capital raise £1.76m on an interest only basis fixed for 5 years, to pay off their existing mortgage and use the funds as a deposit for the purchase and also borrow a further £1.8m on a standard 2-year fixed repayment and interest basis at 1.94% enabling them to purchase their dream property and let their existing home.

Please note, at the moment, lenders across the board are changing their lending criteria and coronavirus has added a huge amount of complexity to peoples incomes in certain situations – so now it is more important than ever to speak a consultant who can help you navigate this shifting market.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

© Private Finance Limited, 2021. Private Finance provides independent mortgage advice and arranges individual mortgage solutions for clients. Private Finance is a trading style of Private Finance Ltd, 29 Lincolns Inn Fields, London, WC2A 3EG, registered in England no. 3855776 and its Appointed Representatives. Private Finance Limited is authorised and regulated by the Financial Conduct Authority (FCA registration number 310566).

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