Key figures:
£4.5million property
75% loan to value (LTV)
2.8% plus LIBOR (London Interbank Offered Rate) interest-only
5-year term
The client:
My client was an ultra-high net worth individual and a member of one of the ruling families in the Middle East.
The property:
He hoped to purchase a property in an exclusive London location for approximately £4.5million, with a loan to value (LTV) of 75%. This property would be used as his base when he spends time in the UK and was, therefore, his second residential home.
What were they looking for?
He wanted to purchase the property in a limited company name for tax purposes, and also hoped to secure this loan on an interest-only repayment basis.
Why was it difficult?
Unlike buy to lets, in which the sale of the property can clearly be identified as an exit strategy, it is harder to justify to a lender what the exit strategy will be for a residential property purchased on an interest-only repayment basis.
In addition, we needed to complete in just six weeks—cases as complex as this usually take months to finalise.
I knew this would be a difficult case to place; for clients such as this, most lenders will restrict borrowing far below 75% loan to value, and the levels of due diligence required will generally take a long time.
However, the real challenge was not the property, but my client’s background. He did not have permanent rights to reside in the UK and was also classed as a Politically Exposed Person (PEP).
What was the process?
Fortunately, I have an excellent relationship with a lender I know is able to work with clients of this background. I also pride myself on my commitment to working quickly for my clients. In this instance, I worked around the clock when needed to make sure I was able to secure the right outcome.
The solution:
As a result, I arranged a rate of 2.8%+ LIBOR over a 5-year term on an interest-only basis. This was an outstanding result, as many lenders would add an additional 2% on top for loans of this nature.
If you are a foreign national looking for a large interest-only mortgage in the UK, I would be delighted to guide you through your options.
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