Transaction Overview
We were approached by a HNW client looking to purchase property in Barcelona for €3.2m, from where they would be spending much more time as a result of Covid and changes to their lifestyle.
Initial Challenges
We were recommended to the client by a lender that was unable to assist due to geographical constraints. We therefore had the added challenge that the client had already approached a number of lenders via other brokers but had struggled to secure financing due to a few requirements that were not being met, namely;
- They wanted to purchase in their individual names, not via a company. Due to mortgage law in Spain many private lenders prefer to lend to an SPV;
- They were being quoted unreasonably high AUM requirements. Their intention was to reduce the AUM as much as possible to free up funds for their own private equity investments plans;
- They were being quoted unreasonable upfront finance set up costs;
- Their overriding objective was to obtain an interest only facility for the longest term possible with no direct or indirect amortization during the term; and
- Speed of service, the completion had to happen in 8 weeks.
Market Analysis
We immediately disregarded the Spanish banks due to their amortisation requirements. With our experience in the sector we were able to quickly identify a number of international private banks that would have the appetite for this type of transaction, be able to lend to the client in their individual names, provide an interest only product for a long term and also have reasonable AUM requirements and upfront costs.
After initial research into the bank’s appetite for the transaction, we were quickly able to obtain a term sheet that the client was satisfied with. Within just a week of fully engaging with the chosen lender we had a full approval from the bank’s credit committee with market leading conditions and 100% financing for their purchase which, in turn, reduced the client’s Wealth Tax obligations in Spain.
Mortgage Direct Premier’s Solution
Behind the scenes we are always working hard on our lender relationships, both in Spain and beyond. Our established relationships with lenders enabled us here not only to be initially trusted by a lender to look after their client but also to obtain a mortgage approval that exceeded our client’s initial requirements.
The final terms achieved were as follows:
Purchase Price – €3,200,000
Loan Size – €3,200,000
AUM Requirement – €1,750,000
LTV – 100%
Loan Type – Interest Only
Term- 7 years
Interest Rate – 1.3%
Arrangement Fee – 0.5%
We were extremely proud to have been able to support our client in buying such an important acquisition and look forward to assisting other clients in the same way.
If you have any questions about the transaction or would like to discuss a tailor made solution for yourself then please feel free to call us at any time.
