The borrower

One of our valued introducers recently approached us about a client who worked in the private equity (PE) industry and who was looking to purchase an eight figure property in the country with large acreage. Clients looking to purchase substantial properties outside London is a trend we’re seeing amongst our clients as a result of the pandemic and we’re needing to move quickly to secure these dream homes.

The problem

One of the main challenges in this case was the property itself; it was of high value, particularly for a property outside of London, which makes it one of only a very few properties at the top end of the market and therefore with the fewest potential purchasers. The client required a high loan to value (LTV) for a property of this size and on an interest-only basis, two aspects that are not necessarily a natural fit in the market.

Being in the PE industry, the client also relied heavily on the carried interest they earned via their PE fund, most of which would need to be taken into account when assessing their ability to borrow.

The solution

The Bank is experienced and indeed setup to understand clients working in the PE industry. As such, we not only took the time to understand the client’s historical income but also their expected earnings through carry and co-invest from funds the currently invested in. Given the PE firm’s success to date, alongside the client's personal success, we were able to take seventy percent of their historical carry into account. By doing so we could approve a twenty-year facility that was structured in two parts; an interest-only mortgage for the majority of the amount and a fully amortising repayment mortgage for the remainder. This acknowledged the client's repayment preference whilst also aligning to their repayment strategy of downsizing in the future.

Important information

Your property may be repossessed if you do not keep up repayments on your mortgage. Investec residential mortgages are only available for residential properties in England or Wales and are primarily available to UK residents and subject to eligibility.