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 : Hyde Park, 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 : Residential
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 : £ 7.7m
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. : 70%
The Situation
Our client had refurbished a property that had gone over budget and taken much longer than planned. 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 from his existing lenderA company or person that lends money to another. had expired, and they were putting pressure on him to re-financeThe 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. before the property was finished. Furthermore the clients income was a fraction of the mortgageAn agreement that allows a Borrower to borrow money from a Lender, by using a property as security for the Loan granted. The Lender will take a charge over the property to secure their Loan. requirement, and was spread across multiple jurisdictions.
The Challenge
Normally a situation such as this can be solved by pledging 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. (Assets Under ManagementNormally 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.) alongside the mortgageAn agreement that allows a Borrower to borrow money from a Lender, by using a property as security for the Loan granted. The Lender will take a charge over the property to secure their Loan.. In this case there was no 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., so the pool of available lendersA company or person that lends money to another. was small and the client had links to the US, so the pool of lendersA company or person that lends money to another. shrunk further. As a Private 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. Partner, the clients income was complicated, and based on carried tradesTypically used in Development Finance to describe the workers outside of the main Contractor, that are typically needed for Second Fix; plumbers, carpenters and electricians are some examples. that wouldn’t mature for several years.
In addition the fact that the property wasn’t finished, and wouldn’t be completed until 2 months or more after we wanted to complete, we really were asking for a lot.
The Outcome
By giving complete transparency on global assetsAn item of property owned by a person or company, that has a value and could be used as Security for a Loan. and income, together with an in-depth understanding of the underlying investments within the fund, we were able to demonstrate that the mortgageAn agreement that allows a Borrower to borrow money from a Lender, by using a property as security for the Loan granted. The Lender will take a charge over the property to secure their Loan. interestRegular payments made by a Borrower to a Lender in return for the money that has been lent to them. was affordable now, and furthermore that future liquidity events would enable the client to pay down the debt.
The bank gave us access to the valuerInterchangeable with Surveyor. See Surveyor. panel, and we were able to speak with 3 different firms and explain the work to date, and confirm the schedule of works to completion. The firm we selected did a huge amount of background work before visiting the property, and were able to support the valuation we needed to complete.
By giving the existing lenderA company or person that lends money to another. weekly updates by email, they were happy to remain patient, and we managed to complete the mortgageAn agreement that allows a Borrower to borrow money from a Lender, by using a property as security for the Loan granted. The Lender will take a charge over the property to secure their Loan. within 6 weeks from the initial enquiry.