Sometimes staying still is the best way to move forward.
It's no surprise that we've seen a rise in demand for remortgages over recent years. Political uncertainty, rising stamp duty costs and a lack of supply in prime central London have curbed the appetite for regularly moving home, which is why many of our clients are staying put.
But even though our clients aren’t moving home as often, their focus is shifting to getting the most from their existing property.
The people we work with have climbed to the top of their chosen fields. And they aren’t done climbing. They're entrepreneurs, property investors, partners at law firms and hedge fund managers. Different day jobs, perhaps, but they share some common traits.
Resting on their laurels isn't part of the plan. They work hard, and they expect all of their assets to work even harder. And this is why so many are remortgaging to raise capital at the moment.
I work with finance professionals - investment bankers, private equity investors, and hedge fund managers. Many already work in the City, few are willing to compromise on location. If they already own property assets and don't want to move, we want to help them unlock their value instead.
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So why are people raising capital against their property? It depends on the client, but financing for renovations is certainly popular.
I saw one example recently of a client capital raising when they borrowed. My client was buying a £7.75 million West London home. The mortgage covered the property purchase but also raised enough capital to carry out home improvements. This wasn't just a lick of paint; they were planning a £4 million makeover, including a basement conversion.
We estimated the two-year renovation would boost the property's value up to £12 million - an ambitious project. No problem. We were able to provide a £6 million facility and additional development financing of £1.5 million to help the client complete their project.
We connect all the pieces of the puzzle when examining repayment capacity, building a bigger, better picture of a client's cash flow profile.
The people I work with have set and achieved their goals again and again. Entrepreneurialism is in their DNA. But my clients often have most of their personal wealth tied up in their businesses, co-investments and deferred bonuses. They have skin in the game, but don’t always have liquid assets on hand when opportunity comes knocking.
That was the situation with another client of mine. He is a co-founder of a successful private equity fund and wanted to raise a second fund. After committing to investing £1 million alongside his investors, he came to us. We had confidence in his track record and increased his mortgage facility by £400,000, which - alongside the client's own £600,000 contribution - was enough to get the deal over the line.
The LTV rose to 93 per cent; pretty high for such a large property. High enough that it's outside the scope of most lenders. They might look at base salary and a few years of bonuses, before haircutting them 50% and punching the figures into a calculator.
But the algorithm isn't designed for professionals with lumpy earnings and complex bonus structures. We are. Our approach and experience with unconventional incomes mean we can dig beneath the surface.
Carried interest, co-investment commitments, ongoing partnership drawings, retained profits, career trajectories. We connect all the pieces of the puzzle when examining repayment capacity, building a bigger, better picture of a client's cash flow profile.
This was no ordinary remortgage, but we specialise in providing highly personalised solutions for situations that can stymie traditional lenders. This is often the case when clients are looking to raise capital for other reasons, like making a business investment.
That picture gives us a clear image of the client’s road ahead. And we want to be a part of the journey.