Scenario:
Our client, a UK resident, was looking to purchase a new home in London and required approximately £1.5 million to cover both the purchase price and associated stamp duty costs.
Rather than liquidating investments, the client wanted to leverage an existing offshore investment portfolio valued at approximately $5 million, which was predominantly invested in the S&P 500. Preserving the portfolio was important, both to maintain market exposure and to avoid potential tax consequences associated with repatriating or disposing of the assets.
Challenges:
Whilst the client had substantial wealth, much of it was held within an offshore investment structure. Traditional UK mortgage lenders are generally unable to lend against offshore portfolios, particularly where the assets are held outside their own banking group.
The client also wanted to keep the investments offshore for tax planning purposes, ruling out solutions that would require the portfolio to be transferred, liquidated or brought onshore.
The challenge was therefore to unlock liquidity from the offshore assets whilst preserving the existing investment structure and maintaining maximum flexibility.
Solution:
We arranged a Lombard lending facility through an offshore private bank with experience in lending against investment portfolios.
The bank was able to take security over the client’s offshore investment account, allowing funds to be raised without the need to sell any investments or alter the underlying portfolio structure. The facility was established on an interest only, rolling 1 year term, providing ongoing flexibility while keeping costs highly competitive.
The borrowing was priced at just 1% over base rate with a 1% arrangement fee, delivering a significantly lower cost of capital than many alternative funding options.