Scenario:
The client had approached us after speaking with another private bank who were not moving quickly enough. The client was a foreign national living in the UK buying a luxury apartment in Edinburgh. Their income was derived from multiple income streams, the main one being royalties earned offshore. For tax purposes, the new property was to be bought through a UK SPV.
Challenges:
It is common for investment properties to be bought through a limited company structure but where the property is to be lived in by family, this makes the case far more complex. The second complexity was the income was earned through royalties received offshore. In general, foreign income can be used but this is normally only if the income is earned from an employed role. Income through royalties means the client was classed as self-employed and not accepted by mainstream lenders.
Solution:
For clients with non-standard, complex incomes, we have a wide range of private banks who can assist. In this case, we were able to demonstrate a royalty agreement detailing the amount of income that would be received over the next 25 years. The client also had a stocks portfolio that could be looked after by the bank via their offshore team in Jersey, allowing us to negotiate the very best terms for our client.
Key figures:
Property value: £1.6 million
Loan amount: £1.1 million
LTV: 70%
Repayment type: Interest only
Product type: 5 year tracker
Interest only: 2.13% above base rate