Our client, an expatriate living in Singapore, was paid in US dollars and was looking to purchase a property in the UK for £4m. Several lenders could offer a loan since the client’s family planned to reside in the property. The critical challenge, however, was to source the maximum loan using the expatriates’ dollar income and the rental income from their high-value properties in the UK.
We identified a niche UK building society catering to overseas and high-net-worth clients. The borrowing was secured at 70% LTV on an interest-only basis. The loan was granted at a discount from the building society’s variable rate, providing a market-leading solution in a climate of rising interest rates.
Several options are available for expatriate clients looking to buy a residence in the UK. The client’s main issue was that they needed a lender that would consider their dollar income and the rental income from their high-value UK property. Since the client qualified as high-net-worth individuals, we were able to explore private banks as potential lenders.
The loan’s affordability would not have been an issue at a high level had we applied standard income multiples. However, all banks use different criteria when considering foreign currency and rental income. Most banks will apply a currency haircut to foreign income, and many will apply stress tests to any rental income received.
The clients had previously applied to a prominent private bank. After considering their application, the private bank was only prepared to lend just over £2m. We compared maximum affordability with several lenders across the retail banking, private banking, and specialist lender markets.
We secured a loan of £2.8m with a relatively small building society with a niche for lending to overseas and high-net-worth clients.
When the client approached us, they only had six weeks to complete the deal. By working closely with the client and our contacts at the lender, the case was credit committee approved in two weeks, and the formal offer was produced in four weeks. The client secured the loan at an advantageous rate, allowing them to purchase the desired property in the UK for their family.