Summary of the transaction
- Borrower Entity: Spanish S.L.
- Acquisition Price: €1,700,000
- Financing: €1,820,000
- Term: 7 years
- AUM: €1,000,000
- Product: Interest only bullet loan
- Interest Rate: 7 year IRS (Interest Rate Swap) + 1.60%
Introduction
We were engaged by a HNW client looking to buy a luxury property in Marbella. He had read our previous case studies and was aware of the bespoke finance solutions we had achieved for other clients.
He did not have a ‘typical’ income profile and had struggled to meet the strict lending criteria applied by many Spanish banks. This is a common issue which we encounter.
Summary
The client had recently retired and had a good retirement plan in place with significant pension plans, investments and properties in Spain and around the world. His intention was to sell some properties and use the proceeds to finance the acquisition of the new property in Marbella.
The client favoured a Private Bank solution, because:
- it was more suitable due to his income situation
- it enabled him to purchase through a Spanish company
- he could obtain an interest only mortgage
- (most importantly) he could start an investment relationship with a bank in Luxembourg which would allow him to invest some of the liquidly generated from the property sales.
Often a private bank proposal is less attractive to luxury property buyers due to the bank’s policy of having a standard minimum investment relationship of €1,000,000. In this case the investment would be 50% of the loan. However, given the client’s ineligibility for finance in Spain and his appetite for a new investment relationship, the proposal was still very interesting and the client decided to proceed.
The approval
We negotiated an interest-only mortgage over a 7-year term, which was an extension from the bank standard term of 5 years.
In our presentations to the banks we demonstrated how the client’s different income streams would satisfy their affordability criteria. His income included pension income, income from the investment portfolio and also rental income from the property (the client’s intention was to rent the property during the summer months). This meant the client comfortably met the lender’s affordability criteria.
We received excellent feedback from the client and some suggestions for a few improvements that the bank could make. Feedback is always very welcome and helps international banks to navigate more efficiently the Spanish system. I am pleased to report that the bank has already initiated some of the suggestions proposed and the client relationship has started very strongly.
At MD Premier, we always strive to deliver a professional, transparent and confidential service, with the client at the heart of everything we do. In doing so, we build long term relationships with clients and banks to ensure we help build solid foundations for a long-lasting and successful financial relationship.
Complete my private wealth assessment form