Case study: Buying a second home with a personalised mortgage

Case study
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How bespoke lending solutions can help individuals with sophisticated financial profiles secure additional property.

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Many individuals, such as business owners and entrepreneurs, corporate executives, or those working in private equity, have complex financial profiles where their income is not always an accurate representation of their wealth and assets.

Depending on their role, a person’s wealth can be tied up in various ways, from stock holdings to carried interest. That means when it comes to securing a mortgage, it can be tricky to get a solution that meets an individual’s specific needs.

The following case study highlights how RBC supports our clients with complex wealth profiles to secure personalised mortgages, enabling them to buy their dream home.

The client

Sarah is the founder of a UK venture capital firm and lives in West London with her husband and children. She pays herself a salary from the fees taken from the company fund and receives carried interest, making her a high-net-worth individual with sophisticated financial needs.

The challenge

Sarah and her husband want to purchase a property in the Kent countryside and take out an interest-only regulated mortgage for £7 million.

Sarah is looking for a bank that:

  • Fully understands her income and carry requirements, and has experience in lending to others in a similar position to her
  • Can provide credit approval and indicative terms for an interest-only mortgage at a competitive rate within a 30-day timeframe
  • Can provide financial protection arrangements for their children, should anything happen to her and her spouse

Sarah and her husband are introduced to a mortgage broker who’s familiar with the lending services RBC provides to our private equity professionals. She wants both herself and her husband to be involved in the decision-making process.

Our solution

Familiar with the needs of private equity clients, our credit team worked closely with Sarah, her husband and their RBC relationship manager to understand their situation and craft a tailored mortgage solution that met their specific needs within the 30-day timeframe:

  • Loan-to-value ratio: 60 percent
  • Term: Five years, revolving facility
  • Arrangement fee: 0.5 percent
  • Spread: 1.45 percent over base rate
  • Discount covenant: 0.2 percent discount where wider liquidity held with RBC equivalent to 50 percent of the loan amount, bringing the margin down to 1.25 percent

As a revolving loan, the solution allows them to pay down when they have surplus liquidity and re-draw when they need the funds.

Our Wealth Planning team also arranged a life insurance policy for Sarah and her husband, providing them peace of mind knowing their loved ones will be protected in case of any unforeseen circumstances.

Flexible mortgage solutions built around your needs

Many individuals are time challenged like Sarah, and that’s why our solutions are focussed on reducing the administrative burden associated with our clients’ wealth. Our priority is to save our clients’ time, maximise their wealth creation and protect their assets so they can focus on what matters most.

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Risk warning: This does not constitute legal, accounting, tax, or individually tailored investment advice, and we recommend you seek independent advice if you are unsure if this product is suitable for you. All loans are subject to your financial circumstances and borrowing history at the time you apply. Your home may be repossessed if you do not keep up repayments on your mortgage.

This publication has been issued by RBC’s Wealth Management international division in the United Kingdom and the Channel Islands which is comprised of an international network of RBC® companies located in these jurisdictions and includes RBC Europe Limited and Royal Bank of Canada (Channel Islands) Limited. You should carefully read any risk warnings or regulatory disclosures in this publication or in any other literature accompanying this publication or transmitted to you by RBC’s Wealth Management international division.

This publication has been compiled from sources believed to be reliable, but no representation or warranty, express or implied is made to its accuracy, completeness or correctness. All opinions and estimates contained in this report are judgements as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. This report is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, the value of investments and income arising can go down, future returns are not guaranteed, and an investor may not get back the amount originally invested. Countries throughout the world have their own laws regulating the types of securities and other investment products and services which may be offered to their residents, as well as the process for doing so. As a result, any securities or services discussed in this report may not be eligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment advice.

This material is prepared for general circulation and does not have regard to the particular circumstances or needs of any specific person who may read it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. To the full extent permitted by law none of the entities which comprise the international division of RBC Wealth Management nor any of their affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copied by any means without the prior consent of RBC Wealth Management.

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