Calculating how much a client could borrow to finance a property used to be very simple. Lenders would offer between 4 or 5 times their annual salary subject to the loan to value ratio. Today calculating how much someone can borrow is a little more complicated with many different criteria being used to determine affordability. At Arc & Co. our clients range from first time buyers through to high net worth individuals whose income is derived from multiple countries and in multiple forms. A recent client fell into the latter category who was wanting to finance a £14m property in near Hyde Park, a prime central London location whose past residents include Sir Winston Churchill and the Earl of Mansfield.
Daire Dowling, Managing Director of Arc & Co. Private Finance, explains why the deal was so complex; “The client wished to raise £4m on a £14m property near Hyde Park after taking tax advice from their accountant. The client didn’t have a traditional income stream, so we had to capitalise an investment portfolio in the background and put interest on account. The main motivation for the client was to cut down on remitted income into the UK from overseas and to generate clean capital within the UK jurisdiction for living expenses and succession planning. We were able to achieve all of this.”
Finance summary
Loan: £4m
Term: 5 year (interest only)
Rate: 1.75% margin on 3 month libor
Termination: No early repayment charge should the client decide to sell or pay down the loan for flexibility
If you would like to speak to an advisor about a property purchase or remortgage then please get in touch with the following link.