Crafting a bespoke lending solution for an Isle of Man pension trustee
Our client’s wishes
A pension trustee client from the Isle of Man approached us looking for a £500,000 mortgage on a property in their pension scheme. They needed this to repay a loan that one of the pension scheme members had previously provided.
Our clients' situation
The pension scheme member had loaned the pension the money to develop the property that would now serve as security for the proposed mortgage. This was an unusual lending case for us. However, despite this, we worked closely with the Trustees and reviewed our credit policies to determine the right approach.
We needed to make sure the scheme’s finances were properly structured and complied with regulations. This meant checking Isle of Man self-invested personal pension (SIPP) rules about property ownership to confirm the trust could legally borrow, especially since UK pensions cannot hold residential properties.
After reviewing the trust deed, we confirmed the scheme could borrow up to 50% loan-to-value. However, we found that the property’s rental income wasn’t enough to cover the loan repayments.
After reviewing the trust deed, we confirmed the scheme could borrow up to 50% loan-to-value. However, we found that the property's rental income wasn't enough to cover the loan repayments.
Our clients' outcome
We offered the trustees three options: reduce the loan amount to match the rental income, assess the wider scheme assets for affordability, or place a cash deposit equal to 12 months of interest payments as security.
The trustees chose the cash deposit option. With this agreement in place, we worked with the client to gather the required documentation. This was submitted and we quickly received approval for the credit proposal.
Our client was delighted with our commitment to finding a tailored solution despite the complexity, and we were pleased to demonstrate our dedication to delivering a swift and thorough service.
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Any examples of investments and structures used are for illustrative purposes only. This case study does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.
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