Case study: How we helped a couple use their investment portfolio to secure a £1m mortgage
Case summary:
Client type: British couple
Employment profile: Recently exited traditional employment
Assets: Substantial self-managed investment portfolio
Main challenge: Demonstrating affordability without conventional earned income
The client:
Our clients were a British couple purchasing a £2m home. and requiring a mortgage of £1m.
Mr had recently exited traditional employment, having accumulated substantial shares in his former employer through his remuneration package. He had encashed a significant proportion of these vested shares and was now personally managing the proceeds as an investment portfolio.
Although the clients had considerable wealth and were borrowing at a relatively conservative 53% loan-to-value, Mr no longer had the conventional salary and employment income that most lenders would ordinarily use to demonstrate affordability.
The investment portfolio therefore needed to perform two roles: provide sufficient income for mortgage affordability and form the repayment strategy for the interest-only borrowing.
The situation:
The income challenge:
The portfolio was newly established and self-managed, meaning there was limited historic investment income on which a lender could rely.
We therefore needed a lender prepared to assess the underlying value and composition of the portfolio and apply an appropriate assumed investment return, rather than requiring an established history of dividends or investment income.
Our solution:
We reviewed the clients' overall asset position, the composition of the newly established investment portfolio and the circumstances surrounding Mr's departure from employment before approaching lenders experienced in asset-backed affordability.
By selecting a private bank willing to apply a considered investment return to the portfolio, we were able to use the same assets both to demonstrate ongoing mortgage affordability and support the interest-only repayment strategy.
Crucially, the application was structured without placing reliance on the substantial remaining unlisted shares, ensuring the case was presented on assets the lender could readily value and recognise.
Our client’s outcome:
The couple successfully secured the £1m mortgage required to purchase their £2m UK home.
The structure allowed Mr to retain control of his self-managed investment portfolio rather than returning to a conventional income model or placing the assets under external management simply to satisfy mortgage criteria.
It also demonstrated that, with the right lender and appropriate structuring, substantial liquid wealth can sometimes support both mortgage affordability and an interest-only repayment strategy even where conventional employment income is no longer available.
Property value: £1.9 million
Mortgage required: £1 million
LTV: 53%
Mortgage: interest only with investments as the repayment strategy
The background wealth challenge:
Mr also retained approximately the same value again in vested shares in his former employer. However, the company was privately held rather than publicly listed.
Despite their substantial value, unlisted shares are generally unsuitable for either monetised affordability calculations or as an interest-only repayment strategy because their future value and liquidity cannot be established with sufficient certainty. We therefore needed to structure the application around the liquid investment portfolio without relying on these additional shares.
The interest only challenge:
As the clients wanted the £1m mortgage on an interest-only basis, the lender also needed to be satisfied that the investment portfolio represented a credible means of repaying the capital at the end of the mortgage term.
This required careful consideration of the portfolio's value relative to the borrowing, the underlying investments and the potential for its value to fluctuate over time.