Our clients’ situation
We were approached by a broker to consider a new mortgage for Mr and Mrs B. The couple were young entrepreneurs who had recently sold part of their company to a well-known private equity firm. As part of the deal, they both remained shareholders and received loan notes of £5million which would become available to them in five years’ time. The loan notes were to earn an annual guaranteed interest of 8% (£400,000) which was available to them to draw down if required. They both also received a nominal salary from the company.
Our clients’ wishes
Mr and Mrs B had an offer accepted on a new property for £1,400,000 and required 75% loan-to-value. Their existing home had just gone on the market for £900,000. They had a mortgage on this property of £445,000 and at the time, no existing offers on the home.
Mr and Mrs B were looking for a loan of £1,050,000 on a non-simultaneous sale and purchase scenario, which would take a view of their loan note annual interest of 8%. Their incomes alone were not sufficient to support the new debt required, but without their existing home under offer they also needed their existing mortgage to be taken into consideration.
With evidence from the CFO of their company, the contract of the sale of their business to the private equity firm, and commentary from the company and their personal accountant, we were able to find a suitable, flexible mortgage for the client.
How we helped
Following an in-depth discussion with the clients and their mortgage broker, we were able to understand their full financial background. With evidence from the CFO of their company, the contract of the sale of their business to the private equity firm, and commentary from the company and their personal accountant, we were able to find a suitable, flexible mortgage for the client.
We structured the clients’ mortgage in a way that took into account a reducing loan-to-value after year one, with a guaranteed repayment to be made from the proceeds of the sale of their present residential home. The initial mortgage was split, with the majority on a two-year fixed rate, and the remaining on a one-year variable rate with no early repayment charges.
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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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