Our client had recently made partner in a private equity firm. As such, the income structure had changed from a basic salary and annual bonus, to a fixed monthly draw and share of annual profits. The property was a 2 bedroom apartment in West London and required significant renovations. This meant the client was looking for a loan which would allow enough funds to be kept back to complete the works.
Having just made partner, the client was not able to demonstrate a track record of income in this role. To borrow the loan required, we needed a lender who could take a view on the previous 3 years income which included salary and bonus and also the expected income going forward which was going to be substantially higher. The issue with most retail lenders is, for equity partners, they will want evidence of the last 3 years total earnings normally confirmed by a letter from the employer. In this case, we could only evidence the current monthly draw from the new role as they had not received any share of profits yet.
After exhausting all mainstream lending options, it was clear only a private bank would be able to accommodate. Taking a combination of previous and projected earnings, we sourced a private bank who could grant a loan equal to 90% of the property value. To the clients surprise, the bank could also offer the whole amount on interest only. Together, this made the purchase not only feasible from a cash perspective, but also would improve cash-flow during the period of renovations.
Property value: £1.8 million
Loan amount: £1.62 million
Repayment type: Interest only
Product type: 10 year fixed
Interest only: 3.89%