| Loan amount | £10,000,000 |
| Property value | £18,000,000 |
| Loan-to-value | 56% |
| Property type | Belgravia townhouse |
| Location | Belgravia, London (SW1) |
| Borrower | Jersey trust |
| Term | 25 years interest-only |
| Rate | 5-year fixed |
| Lender type | Private bank |
The Story
A professional introducer in London approached us to finance a £10 Million loan on a property in Belgravia worth upwards of £100 Million. The complexity was that the property was owned in the name of an offshore trust in Jersey and that the funds were to be placed into an investment for the beneficiary of the trust. The beneficiary occupied the property.
To complicate matters the beneficiary of the offshore trust was an older applicant and would fall foul of most lenders maximum age restrictions.
The introducer had already tried several banks he knew of and they had declined to lend.
The Challenge
From the initial enquiry it was obvious that this was a private banking solution rather than anything the high street could offer. The funds were not being used right away and would instead be invested and so it made sense for the same private bank to lend and to invest the funds for the client.
The introducer had approached the clients own private bank and one other he had a relationship with and they had both declined to lend. We knew that we would need a private bank that would be flexible in their underwriting.
With this case we spoke to just one private bank. We knew that the bank was lending at very low rates and charged very low fees. Furthermore, their investment fees and past performance of managing funds was impressive. Fox Davidson had worked with the bank on several previous deals and knew that they could be flexible in their lending.
The Solution
Following an initial meeting with the bank we gained the banks agreement to lend the full £10 Million to the offshore trust in Jersey for the benefit of the beneficiary in Belgravia. Several more meetings this time involving the trustees, Fox Davidson and the private bank and following quite a lengthy due diligence process, the terms for lending were formalised in an offer.
The rate of interest was set for the life of the loan at 1.2% over bank of England base rate. The lenders fee was 0.35%. The mortgage was agreed on an interest only basis, effectively serviced by its own money which would be invested.
The refinance of the Belgravia property completed some 6 months after the initial enquiry, such was the complexity of the lending.
This was a complex case, not because of the offshore trust but because of the age of the client and because their income would not support such a loan. In addition, the funds would be invested with the private investment bank which would then provide an income for the beneficiary and would service the interest only loan.
The risk to the bank was minimal as there were considerable assets within the trust and the funds would be held with the bank.
This was a lending situation that many banks would not entertain. It was satisfying to work with a contact of ours at a private bank that finds a way to make deals happen.
The rate secured was very competitive and the client and the trustees got a very good result.
Specialist Lending For Residential Mortgages
To discuss private bank finance with a high net worth mortgage broker please do contact us at enquiry@foxdavidson.co.uk or call us on 03300 100313.
Frequently asked questions
What is a high net worth mortgage?
A high net worth (HNW) mortgage is assessed under the FCA’s high net worth rules rather than the standard affordability test. It is available to borrowers with net assets over £3 million or annual net income over £300,000. Lenders read the net assets test literally and include the equity in your main home, and on a joint application only one of you needs to meet it.
How does HNW mortgage assessment differ from a standard mortgage?
HNW assessment is whole-of-wealth based rather than income-multiple based. Lenders consider total assets, liabilities, liquidity, income, and lifestyle costs, then negotiate loan size based on the overall financial picture.
What loan sizes are available with HNW mortgages?
HNW mortgages typically start at £1 million minimum and have no upper cap. Loans of £5 million to £20 million are routine for qualifying clients. Loans above £20 million typically involve syndicated lending or relationship-driven arrangements with private banks.
How long does an HNW mortgage take to complete?
HNW mortgages typically complete in four to ten weeks. Mainstream HNW lenders are at the faster end. Private bank cases involving committee approval, complex structuring, or offshore elements can take eight to twelve weeks.
Further reading: large mortgages, private bank mortgages, high net worth mortgages, UK international mortgages.
Completed transaction. This case study describes a live deal arranged by Fox Davidson. Client details are anonymised and figures rounded.
All rates and terms are indicative and subject to individual assessment, lender criteria and property valuation. Your home may be repossessed if you do not keep up repayments on a mortgage.
High net worth mortgages under the FCA high net worth definition. Private bank and specialist lender access.