Scenario:
The client was living in a £4 million property with an existing £2 million mortgage. The current lender was no longer willing to renew the facility, and a new mortgage was needed to avoid having to sell the home.
The client had no traditional earned income and only a modest income stream from letting the property on Airbnb. The primary source of wealth was a £1 million stock portfolio, actively managed and intended for long-term financial security.
Challenges:
The income was not sufficient for mainstream lenders, who typically require stable, earned income to meet affordability criteria. While substantial assets were held, most lenders were either unable or unwilling to take the investment portfolio into account.
Many private banks that could consider the portfolio required a transfer of assets under an AUM (assets under management) agreement. This was not an option, as the client trades frequently and wanted to retain full control over the portfolio.
Solution:
The mortgage was structured as a joint borrower, sole proprietor application by including the client’s partner, who lived in the property but was not on the title deeds. This allowed the overall financial profile to be strengthened while keeping the property in the client’s sole name.
The partner had a £1 million pension pot, which, combined with the client’s £1 million stock portfolio, provided £2 million in liquid assets. The lender was satisfied with the strength of the combined asset position, despite limited income.
An interest-only mortgage for the full £2 million loan was secured through a building society, with no AUM requirement and no need to transfer or sell any investments. This provided the ability to remain in the property while maintaining full control of investment strategy.
Key figures:
Property value: £4 million
Loan amount: £2 million
LTV: 50%
Repayment type: Interest only
Product type: 2 year fixed
Interest rate: 6.04%