Asset Rich Cash Poor? Is this you?

Fiduciary Wealth Team

The worldwide financial crisis which began in 2007 has completely altered the landscape for anyone wishing to borrow from traditional lending sources such as high street  banks  which either  don’t  have the capacity to lend because they are struggling to redress their balance sheets or have simply lost the appetite to lend  on what might appear on the face of it the safest of transactions. The ‘liquidity  crisis’ has also impacted on equity release schemes particularly in countries such as Portugal and Spain where interest could be rolled up without the need for monthly debt servicing. Home owners looking to release capital from their property now face an uphill task in releasing cash.  

However, creative solutions can be found. Whilst traditional lending sources may have dried up there are private banks and boutique lenders willing to offer facilities to high net worth individuals at extremely competitive terms particularly where there is an opportunity for a bank to secure additional business from a client be it an investment portfolio or a cash  deposit. We have strong relationships with many banks through which we are able to provide credit to clients  unable  to  rely on their existing lender. Our role as intermediary is not only to source the facility but to present a detailed proposition to the lender in a way that will improve the prospects of a successful outcome whilst protecting the interests of the client at all times. A recent example of this was a facility negotiated with a private bank able to effectively offer bridging finance  to enable a client to purchase a new property without the need to sell any of his existing real estate portfolio. Instead of being faced with a double digit interest rate  on  a standard bridging facility offered by his own bank, the client was able to secure the facility at a very low rate of interest by pledging assets and offering a charge over residential property in three different countries. How’s that for flexibility?  

Similarly clients looking to release equity from their Spanish or Portuguese properties may find it more advantageous to include their UK property as part of a portfolio offering to prospective lenders.  

There are of course traditional equity release schemes still available from a few UK lenders for domestic lending but even these need to be compared with other options available in the market place as interest rates tend to be at a premium and the schemes will only offer a significant release of equity to those clients who are in their late sixties and older.  

Equity release can of course have an additional advantage of reducing estate liability for inheritance tax purposes but whatever your needs it is essential to speak to an adviser who has a thorough understanding of the mortgage market in different countries.

At Fiduciary Wealth we will assess your requirements and look at your overall financial arrangements rather than dealing with your borrowing in isolation. There may be better options available than releasing equity from property such as the drawdown of a tax free sum from a pension fund or an arrangement where income can be taken from a retirement fund at greater  levels than current annuity rates. You may have investments which can be turned into income producing assets in a tax efficient way through the use of offshore wrappers for example, or you may be lucky enough to own a plane or a yacht where we can negotiate an improved facility to extract equity or reduce costs.  

When it comes to financial matters we aim to be at the forefront in finding innovative solutions. As well as our mortgage division we have a subsidiary real estate company that offers clients the opportunity of marketing exclusive property in a discrete and highly efficient way by targeting potential buyers using our network of connections  in  all   our   market   areas. In addition  we  offer  extremely competitive insurance products including a unique facility where clients owning property in the UK and overseas can insure these on one single policy including buildings, contents and cars. A simple but very effective alternative to holding policies in different countries with various renewal dates and terms and with significant additional  benefits  included. 

Whilst it is likely that property will remain the biggest single asset in a clients’ portfolio and whilst mainstream lenders continue to baulk at offering facilities to the vast majority of potential clients it pays to seek the services of a specialist adviser who will take a holistic approach to your overall financial position and seek solutions for clients who want to stop being asset rich and cash poor.