GSB Private Finance was recently presented with a complex lending enquiry – a prominent entrepreneur in the solar-energy industry seeking to purchase a new main residence, but with insufficient personal income, GSB had to deliver a bespoke solution.
Key Details:
- UK Resident/UK Passport holders
- Acquisition of an off-market property and annexe in Hertfordshire for ~£3,000,000 at 75% loan-to-value
- HNW borrowers with low incomes ‘on paper’ but significant business revenue projections and assets owned in their business name
- Facility of ~£2,250,000 secured with a Private Bank at a margin of 1.50% + cost of funds without any requirement for Assets Under Management (AUM)
The Request
GSB Private Finance were engaged directly by the borrowers as repeat clients to arrange a mortgage against their new main residence.
Both clients had sophisticated income structures and, therefore, needed a lender to consider cash holdings, retained profits and a pipeline of projects to evidence affordability.
Challenges
- Both borrowers’ income resulted in a loan size that exceeded a 10x loan-to-income multiplier and was mostly derived from overseas SPVs through a global corporate structure.
- The main income earner had a track record limited to 2 years of delivering solar-energy projects and reaching profitability. Delivering projects overseas – Projects are abroad and therefore limited exposure/knowledge of that market; therefore, needed to rely on the client and his track record for expertise and timeframes.
- High LTV mortgage.
- Our clients had agreed an off-market sale at a discount to the market value, with a timely completion required as part of the transaction.
- The security property consisted of two titles with independent council tax and required some work to be done.
- Outside of the business, the client’s wealth was mainly in illiquid assets, which, in the absence of high levels of income, many lenders were concerned about.
Solution
~£2,250,000 mortgage over 25 years at a margin of 1.50% + cost of funds without any requirement for Assets Under Management (AUM).
After negotiating the most desired terms and structure with credit teams of a select few lenders, GSB Private Finance arranged a part-and-part mortgage, consisting of an amortised term loan and a bullet repayment after the first 5 years designed to maximise loan-to-value while keeping monthly repayments at an acceptable level.
The agreed structure was as follows:
- A single facility secured against both properties
- Capital Repayment: £1,250,000 over a 25-year term
- Interest Only: £1,000,000 over a 5-year term
While the lender was concerned with the comparable lack of personal income and liquidity to service the debt, GSB were able to evidence strong income projections from the self-employed borrower’s limited company through engaging with the client’s Accountant. GSB were also able to evidence assets held in personal and corporate capacities that could be monetised to evidence affordability.
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Disclaimer
This content is provided solely for educational and informational purposes. It should not be considered as financial advice, an offer, or solicitation for any product or service, nor does it constitute a recommendation. Any details or descriptions are intended to illustrate hypothetical transaction structures and do not reflect specific client advice or outcomes. This material is not intended for marketing purposes. Please consult a qualified financial adviser to assess your individual financial situation and goals. GSB assumes no responsibility or liability for any errors, omissions, or reliance on the information presented here.