Releasing equity from an unencumbered property isn’t usually a problem, but when the amount being raised is £2 million and the borrower has only recently returned to work from a career break, then the transaction is inevitably going to raise a few eyebrows.
Paul Nicklinson, a mortgage and protection specialist at Hampshire based Accordia Financial Services, realised that he was going to have to look beyond traditional high street lenders to find a solution for his client.
Paul’s client had recently taken up a position as a senior executive for a leading international bank, having had a 2-year break from a long and distinguished career in finance. He and his wife lived in a property worth £4 million and also owned a number of additional properties in Europe worth several million pounds. He also had private equity investments worth approximately £5 million, a six-figure salary and share allowance of £600,000, which was guaranteed.
Paul explains the issues when arranging a mortgage for this type of borrower: “High net worth borrowers may have plenty of equity, but their income can often be complicated typically comprising salary, bonus and vesting stock options. They may also have significant assets but, again, it can be complicated understanding their true financial position. It’s never as simple as applying a straightforward income multiple or using a basic affordability calculator!
“I realised this deal would require a bank that was comfortable with the large amounts involved and was familiar with the financial complexities associated with the type of high net worth client I was advising. I knew from previous experience that this was exactly the type of lending Investec does, so I contacted James Thomson, a private banker at Investec, and explained my clients’ circumstances to him.”
James Thomson takes up the story: “Although Paul’s client had taken a 2-year career break, we could see he had a long and impressive track record and an excellent reputation within the industry. We could also see that he was in a strong financial position in terms of his salary, bonus share options and other assets and we were therefore happy to lend.”
Paul continues: “Investec had a very positive attitude from the moment I first made contact and James was keen to find a way to make the deal work for both my client and the bank. I was also impressed that Investec didn’t make the deal conditional on my client needing to hold his assets under management with them. Clearly, they are keen to establish a wider working relationship with my client, but are willing to lend first and talk about other services later, which is very refreshing from a private bank.
“The speed of response and quality of service has been excellent and I was very impressed with the package James was able to construct for my client. As well as being competitively priced, the mortgage was provided on an interest-only basis and structured so that as my client pays down his capital balance he benefits from a lower charging rate.
“I would certainly have no hesitation in recommending Investec again for this type of high value deal.”
Peter Izard is business development manager at Investec Private Banking