This week's case study highlights how Alexander Hall's specialist lending team, helped a high net worth client facilitate a purchase through a short term financing arrangement.
Our clients' challenge
A high net worth client approached us looking to fund the purchase of his new home in North London. He had agreed a price of £2.6 million and needed to borrow the full amount plus the stamp duty. His initial plan was to sell his main residence worth £5.5 million to fund this, but he had found the new property before agreeing a sale on his existing home. Therefore he needed a short term loan to fund the purchase, which he would then repay once his property sold.
He had also agreed to an exchange in 4 weeks so speed was paramount. The client was an entrepreneur, whose income wasn’t standard. When he approached his bank they informed him they could not assist.
Alexander Hall's solution
A traditional mortgage wasn’t possible due to the way the client’s income was structured, and due to the current debt secured on his main residence the existing lender wouldn’t agree to a second charge. Therefore we looked into bridging loan options. The client had a background property worth £3 million which was unencumbered, so we proposed securing the bridge across this house, plus the new main residence. Once the client sold the main residence he would be left mortgage free.
We approached a private bank with whom we have a long-standing relationship. They have a reputation for looking at a client’s circumstances holistically, and are able to act incredibly quickly. Using both properties they were able to offer 100% of the purchase price plus the stamp duty, and had no requirement for further assets under management. The only thing they asked of the client was that they ‘pre-fund’ the interest i.e. put 12 months interest into a locked account to service the debt. There were no exit penalties as well, which meant if the client managed to sell their property quickly, they could pay the bridge off at any point and reduce the amount of interest paid. Needless to say, the client was delighted with the solution, and the rate we achieved was market leading (base + 2.5%)
