Problem
Boasting a substantial portfolio of London-based properties, valued in the region of £30M, with debts of £12M, this client required support preparing for the end of their mortgage terms. With each property individually mortgaged with various lenders – with many on fantastic legacy products – the client anticipated that a significant amount of work would be required when the terms came to an end. On this occasion, the client had no other meaningful wealth besides their portfolio.
Solution
The client’s portfolio was incredibly well-geared with a Loan-to-Value (LTV) of around 40%, receiving significant rental income each year. Having tapped into our vast network, a private bank was able to refinance the client’s entire property portfolio, capital raising £7m in funds. These funds were invested with the lender to create an Assets Under Management (AUM) portfolio, with the client given full autonomy over the investment strategy, as well as a cash facility, known as a Lombard, should he need to pull out cash for new purchases.
Outcome
The client saw dramatic improvements across the board, having refinanced to a new loan of £19M, repaid all his existing debt, and created an AUM portfolio of £7m, which yielded an average of 10% over the last 6 years. With a far more diverse portfolio, having effectively used his equity to create considerably more wealth than the interest is costing, the client managed to unlock additional capital of £4.25M in compounded growth over the initial 5-year term.
Loan: £19,000,000
AUM Portfolio: £7,000,000
Mortgage Rate: 2.25% Over Base – an expected £522,500 interest per year at mortgage start
Approximate Capital Growth: 7% PA – an expected £490,000 of capital growth per year at mortgage start
