Overview
LocationUsed by us to distinguish where the property is that the loan will be made against. Lenders can be location agnostic, and believe that different locations should attract different Underwriting Criteria and pricing : Multiple Properties across South-West London
LoanWhen something is borrowed by one person / entity from another. Normally it refers to money, and a rate of Interest is charged whilst the debt remains outstanding. More Type : Buy-to-Let
LoanWhen something is borrowed by one person / entity from another. Normally it refers to money, and a rate of Interest is charged whilst the debt remains outstanding. More Size : £ 10.59m
Loan-to-ValueThe ratio of debt to property value, expressed as a percentage; for example a Borrower that obtains a Loan of £ 6,000,000, against a property value of £ 10,000,000, would be expressed as 60% LTV. : 75%
The Situation
Our client wished to re-mortgageThe replacement of an existing Mortgage with a new Mortgage. Normally used when a Borrower moves form one Lender to another, and doesn't necessarily mean that the Loan amount changes. and release significant equityThe difference between the debt and the asset value; the part that the Borrower actually owns. The equity value can increase in value over time, if debt is reduced and / or the property increases in value. The reverse can also happen. See Negative Equity. across 29 BTL propertiesAn investment property, normally held for the long-term and to produce an income, and / or Capital Growth. A property purchased specifically for the purposes of being rented out. The Landlord collects Rental from the Tenant in return., on a long termThe period of time agreed between Lender and Borrower, at the end of which the Loan should be repaid or an extension negotiated. Also known as Loan Term. fixed rateWhere your Loan Interest Rate remains the same for a defined period. The best option for borrowers that want certainty of the borrowing costs. Fixed rates normally attract Early Repayment Charges if broken before the defined period finishes, so you should be certain you want to retain that asset for at least that period of time..
The Challenge
Our client owns more than 150 properties, so this was a small section of his overall portfolio. As the majority of his income is derived from property, and given that he didn’t want to pledge AUMNormally a term used by Private Banks to refer to Liquid Assets that are custodied on the banks platform. Most Private Banks use Mortgages as a way to do further business with a customer, and will have a minimum AUM threshold to qualify as a client of the bank and / or for a Mortgage. The amount can be a set figure, or a percentage of the mortgage amount; e.g. 25%. If they do not require AUM as part of the mortgage this commonly known as a Dry Lend., this ruled out all Private BanksBanks that cater for HNW clients. Typically they will offer Mortgages as well as Asset Custody / Management (AUM) and Wealth Management services. Most will have minimum requirements to become a client, whether that be a certain annual income, NAV or immediate AUM (or a combination of all of the above). They will generally have a better understanding of clients that have more complex income (multiple sources and / or jurisdictions)..
Given the number of properties that he owned in his wider portfolio, all high street banks were also ruled out. The leverage we wanted to achieve also meant this was a difficult deal for most commercial banks as well.
The Outcome
A 5 year fixed rateWhere your Loan Interest Rate remains the same for a defined period. The best option for borrowers that want certainty of the borrowing costs. Fixed rates normally attract Early Repayment Charges if broken before the defined period finishes, so you should be certain you want to retain that asset for at least that period of time. of 3.79%, despite the overall value of the properties being reduced by nearly £ 4m by the banks valuerInterchangeable with Surveyor. See Surveyor..
Fortunately, we were able to get the bank to increase their LTVThe ratio of debt to property value, expressed as a percentage; for example a Borrower that obtains a Loan of £ 6,000,000, against a property value of £ 10,000,000, would be expressed as 60% LTV. from 65% to 75% rather than reduce the loanWhen something is borrowed by one person / entity from another. Normally it refers to money, and a rate of Interest is charged whilst the debt remains outstanding. More amount, and the client was able to release the equityThe difference between the debt and the asset value; the part that the Borrower actually owns. The equity value can increase in value over time, if debt is reduced and / or the property increases in value. The reverse can also happen. See Negative Equity. they wanted for further property investment.