Russian national, Monaco resident looking to remortgage UK family home

It is no secret that Monaco is home to some of the richest individuals in the world, many of whom have property portfolios spread right across the globe. For some time now we have had a very strong presence in the Monaco property market servicing an array of clients with assets in many different countries. This is where our experience in other markets can prove invaluable especially with multi-million pound remortgages on overseas properties. We are regularly asked to research solutions for the remortgaging of UK property for overseas nationals living in Monaco. Read more about overseas mortgages.

This case study involved a Russian national based in Monaco who was looking to remortgage their UK family home. The client was an ultrahigh net worth individual with an array of assets and income which would prove extremely useful when securing the finance. We are well-versed in the often complex income/asset structures associated with ultrahigh net worth individuals and the best way to utilise these to maximise funding. This client was looking to raise £30 million on a relatively high LTV ratio but there were additional assets we could use to secure the most competitive terms.

Client scenario

Those familiar with the real estate market will be well aware of the changes within the UK with regards to overseas investment taxation. It is extremely important to ensure that any transactions are structured in the correct manner to minimise financial liabilities and maximise income/assets available. It was very clear from the outset that the structure required for this particular remortgage was more suited to a private bank/niche lender. As an independent broker we have access to more than 300 lenders across the world and an ability to inject a degree of competition to ensure the most competitive rates.

So, in basic terms we had an ultrahigh net worth Russian national, living in Monaco looking to remortgage a family home in the UK. The property itself was valued at £70 million with the client looking to secure a £30 million remortgage. When you take into account the client’s scenario this was a relatively high LTV ratio of 43%. Thankfully, we also had access to a significant amount of additional investments which we could include in an AUM arrangement. We have extremely close relationships with a number of private banks/niche lenders and are fully aware that many will offer very competitive remortgage rates if there is an opportunity to extend their relationship going forward.

The basic scenario was as follows:-

Client: Russian national
Residence: Living in Monaco
Income: Ultrahigh net worth individual
Property value: £70 million
Remortgage requirement: £30 million
LTV ratio: 43%

For a UK national living in the UK, remortgaging with an LTV ratio of 43% would certainly be well within the realms of possibility. The situation becomes a little more difficult when it is a foreign national living in a different country looking to remortgage a UK property. As we touched on above, the key to securing the best remortgage rate for this particular case study was to put in place an AUM arrangement which was acceptable to all parties.

Issues to address

Our experience shows that ultrahigh net worth individuals often have a complex financial structure which can sometimes be difficult to utilise in full. They tend to have assets, income and investments spread right across the globe and are not always as liquid as one might assume. Indeed, many ultrahigh net worth individuals we come across are extremely asset rich but often lack immediate liquidity. The private banks/niche lenders with whom we work with tend to focus on a client’s assets as opposed their income when looking at multi-million pound remortgages. After all, they are still remortgaging using the property in question as collateral.

After in-depth discussions we realised there were a number of issues to address such as:-

Client: Russian national
Residence: Monaco
Income: Ultrahigh net worth individual
Property: UK
Property value: £70 million
Remortgaging funds: £30 million
LTV ratio: 43%
AUM: Investments available if required

The key to securing the most competitive terms for a remortgaging is to maximise both income and assets available while ensuring there is a degree of headroom for the lender. The headroom in this particular scenario would come in the shape of an AUM arrangement giving the lender the opportunity to extend their relationship going forward. In years gone by it would have been difficult to raise this level of funding on a remortgage for a foreign national living overseas looking to remortgage their UK home. Thankfully, the emergence of specialist private banks/niche lenders not only ensures these refinancing options are more readily available but also attracts a degree of competition to secure the best terms.

The solution

So, in summary you have a £70 million property in the UK owned by an Russian national living in Monaco. The client was looking to raise £30 million and after in-depth discussions with the client we knew there were significant investments available for an AUM arrangement. We were therefore able to maximise the income and assets available in order to secure the full £30 million on LTV ratio of 43%. During negotiations with the lender we were made aware that they would consider increasing the LTV ratio up to anywhere between 70% and 75% on the same terms. While this gave the client additional funding capacity to consider, in this instance it was not required.

The exact details of the funding solution were as follows:-

Property value: £70 million
Remortgage funding: £30 million
LTV ratio: 43%
Type of funding: Interest only
Mortgage interest rate: 1.4% + 3 month LIBOR
Fixed period: 60 months
AUM: £50 million

As UK base rates remain near their historic low after the 2008/9 financial crisis there was certainly scope for significant savings with this remortgaging. There is no doubt that the offer of a £50 million AUM arrangement encouraged the lender in question to provide very competitive terms. The opportunity to expand and extend their relationship with this ultrahigh net worth individual obviously had a significant potential value for them in the longer term. In the short term, it ensured that we were able to negotiate very competitive terms on the remortgaging.

What can Enness do for you?

Over the years we have dealt for approaching 100 different nationalities spread right across the globe with very different financial structures. Our strong presence in the Monaco market is mirrored by our strong presence in London and our in-depth knowledge of both regions. It is therefore no surprise to learn that we are regularly approach by Monaco residents looking to remortgage properties in the UK and overseas. We have the contacts, we know the information they require and we know how to present a client’s financial standing in the best possible light. The use of AUM arrangements is a win-win situation for both parties, a degree of insurance for the lender while the client still maintains ownership of the AUM assets. The LTV ratio looked fairly straight forward at first glance, 43% on a £70 million property, but it was the foreign national status, Monaco residency and UK-based property which made this a little more complicated.

While we have very strong relationships with traditional banks, we are experts in creating bespoke financial arrangements, through private banks/niche lenders, for those with less than straightforward financial structures. In many ways this case study showed the strength of our skills and relationships in the money markets. We were able to secure a £30 million remortgage on a UK property for a foreign national based in Monaco. If you ever find yourself in a similar situation we would welcome the opportunity to discuss your requirements in more detail and put together various options for your consideration. We have access to real-time market rates which allows you to compare and contrast cash flow and short, medium and long-term financial liabilities on the options available. While we obviously look to secure the best terms by utilising income and assets as much as possible, this is all done in a controlled manner without overstretching finances and cash flow.