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 : Mallorca (Majorca), Spain
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 : Residential MortgageIs typically a Loan against a person's main residence; they key definition being that 40% or more of the property is to be used as a dwelling by the borrower or their immediate family. Also known as Regulated Mortgage Contract.
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 : € 11m
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. : 60%
The Situation
Our client was looking 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 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. from a property that had been meticulously re-furbished. The property is one of the largest private residences in Mallorca.
The Challenge
The clients income was low in comparison to the debt quantum. The client was also paid from multiple sources across multiple jurisdictions.
On the property itself, this is a large 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 by Spanish standards, and there aren’t many banks that can assist. The illiquid nature of the assetAn item of property owned by a person or company, that has a value and could be used as Security for a Loan. also increases the perceived risk for lendersA company or person that lends money to another..
The Outcome
By maximising 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 to value at which the bank would lend, we were able to offer interest coverWhen a borrower is unable to service Interest from income, the Lender may ask for cash to be deposited with them to cover the future interest payments. This is typically used by Private Banks - a good example would be a company owner that is not drawing enough income to meet their commitments, but has enough money in the company to demonstrate affordability. This is also used by BTL Lenders to cover potential Rental Voids, or if there is shortfall in income cover after tax. Interest Cover is also used in Commercial Property for the same reasons as BTL. It may also form part of the Loan Covenants. to the bank, which helped overcome the low income. The client also created an 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. portfolio with the client, that was designed to help part service 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.
By having a deep understanding of our clients assetAn item of property owned by a person or company, that has a value and could be used as Security for a Loan. base, we were able to give the bank comfort around the clients ability to repay 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, via future liquidity events.