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Case study: leveraging the family relationships

Family support was needed to help a young couple buy and build a new home, without money being gifted, while working with the whole family’s finances.
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Ben and his wife, Catherine, are in their early 30s and have a toddler. While he is the owner of a successful business, it has only been operating for two years. They were looking to buy a property that would be knocked-down to be rebuilt as a family home that met their medium-term requirements.

However, even though they would also be reinvesting the proceeds from their current home, the amount they were looking to borrow was higher than we were able to lend under the Mortgage Conduct of Business rules for regulated mortgages.

The lending process

Ben’s parents were long-term clients of the bank, and keen to help their son, but he did not want them to gift the money to him. Instead, we worked with the family to transfer funds from their bank account with Nedbank Private Wealth into a side account, and used the cash to guarantee the loan amount, as well as provide ongoing funds to service the debt. 

In addition, because it is the parents’ funds guaranteeing the loan, we ensured that they took independent legal advice before completing the paperwork so they understood any potential repercussions for the arrangement for their finances.

The results

With the loan guarantee secured by the cash deposit, rather than against the property, the bank was able to reduce the cost of borrowing to the children, which made the loan possible and gives additional comfort to all parties that the loan servicing is affordable. 

Ben and Catherine are now moving ahead with their plans to rebuild, an approach they also believe will stand them in good stead given they want to repeat the experience in the future, when they will look to sell, buy another property which will be rebuilt to provide their forever home.

Clients can borrow against a UK, Isle of Man or Channel Island-based residence, be it a home or an investment property. We also lend against investment portfolios, and loans can be denominated in Sterling, Euros or US Dollars.

 

To find out more about Nedbank Private Wealth’s bespoke lending services, please contact your private banker directly or call our client services team on +44 (0)1624 645000. Or you can get in touch using the links to the forms towards the end of this page.

Your home is at risk if you do not keep up repayments on a mortgage or any other loan secured against it.

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