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Specialism: Financial Advisory & UHNW Services Property
Company: Butterfield Mortgages
Location: London, England
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Average client size: £5 million - £25 million
Fixed fee offering: No
Number of offices globally: 1-5
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Custom plan mortgage for short term goal
High net worth British residents, clients at the time of another bank, owned a main residence with a value of £7 million, on which they had an outstanding mortgage balance of £2.4 million. In addition, they owned a smaller, buy-to-let property that was unencumbered by a mortgage. Their medium-term objective was to sell the main residence and move in to the buy-to-let property once the sitting tenants had left. They were understandably keen to do so in their own time and making use of advantageous market movements, and to this end, they sought a renewal of the mortgage for a limited period. However, their attempts to do so encountered an unexpected obstacle. The clients had £180,000 of earned income and a £4 million investment portfolio. Their bank, which offered fund-management facilities, made it a condition of mortgage renewal that the clients’ assets be placed under the bank’s management. Butterfield Mortgages Limited (BML) does not manage assets, thus never makes the placing of assets under management with us a condition of lending. In fact, BML does nothing other than advance mortgages to HNW individuals. In this case, BML, having been approached by the clients, examined the lending proposition. We agreed to lend on a three-year term on an interest-only basis. The full-term interest was pre-funded by the clients. This meant the clients were able to avoid the two unpalatable choices they had faced, either selling the property under duress, possibly at an inopportune time in terms of market conditions or having to lodge their assets with their existing bank as a condition of their mortgage renewal. This meant they were able to place the property on the market at a time of their own choosing and, when the tenants vacate the buy-to-let property, they will move to this smaller home. BML made it possible for the clients to follow their original plan and to continue to manage their assets in the way that suited them best.