These high net worth individuals also often seek mortgage solutions that allow them to free up funds to cover other expenses, or for investment opportunities.
When Investec recently met a client in the above situation, we were able to create a bespoke
solution that allowed the client flexibility, while also taking into account the full picture of their income situation.
A private equity partner whose income was a mix of salary, bonus and carried interest,
all paid in euros.
Our client had sold their current residence and was looking to purchase their next. They were expecting to receive a large amount of carried interest in the coming months, which they hoped to set aside to draw upon when needed, whether for tax bills or for future co-investment opportunities.
Many private equity partners would prefer not to tie up too much of their wealth in a mortgage.
This is often the case if they face high tax bills or they simply want to be ready to make future investments.
In this case, Investec was able to structure a mortgage in two parts. The first was a 15-year, interest-only revolving mortgage, which is a flexible facility secured against a client’s primary residence. Unlike a traditional mortgage, it provides freedom to access funds, up to an approved limit, as and when required. Opting for a revolving mortgage allowed our client to draw up to the mortgage limit or pay down as often as they needed to. The second part was a five-year, fixed-rate mortgage for the remaining amount.
We were happy to be able to find a solution to our client’s problem, meeting their needs regarding tax bills and future investment opportunities while taking a holistic view of their income – including carried interest.