Introduction: Why This Case Matters to Professional Advisers

If you advise high-net-worth clients, you will be familiar with a common tension: a client has significant wealth in property, investments, or both, but struggling to access it in a tax-efficient and strategically sound way. 

In this case, a client needed £2,000,000 to fund the purchase of land ahead of a self-build project. The instinctive solution might have been to liquidate investment assets to fund the purchase. That approach would have been costly, triggering potential capital gains tax liabilities, disrupting a carefully managed portfolio, and reducing the assets under management that the client's wealth manager had built and was actively growing on their behalf. 

Instead, a specialist mortgage provided an entirely different path. The client borrowed against their unencumbered property, the portfolio stayed intact, and the wealth management relationship was strengthened. 

This is the kind of outcome that good collaboration between specialist mortgage advisers and professional advisory teams makes possible.

The Case in Brief

The clients are a couple with three young children. Their principal residence, a substantial property in St Albans, Hertfordshire, was owned outright, valued at £3,025,000. They wished to release £2,000,000 to purchase land, intending to follow this with a self-build mortgage to fund construction of a bespoke family home.

The Mortgage Required

The Income Challenge and How We Resolved It

For professional advisers, the most instructive aspect of this case is the income structuring. The primary applicant is in senior employment with a strong base salary and a well-documented bonus history across two consecutive years. The second applicant is a homemaker with no earned income.

On employment income alone, the required level of borrowing was not achievable.

The solution lay in the clients' investment portfolio, held with a professional wealth management firm. Rather than recommending the clients draw income from the portfolio or worse, liquidate positions, we worked with a specialist lender to apply a deemed income approach: 4% of the portfolio value was used as assessable income for mortgage purposes.

This is a recognised and well-established method among private and specialist lenders for high-net-worth clients. The key characteristics are:

• Notional income: The 4% figure is a deemed rate applied to the portfolio value. No actual withdrawal is required from the portfolio to satisfy the lender.
• Assets remain under management: The portfolio stays with the wealth management firm, invested and managed precisely as before. The mortgage is entirely separate from the investment strategy.
• “Dry loan” structure: In market terms, this is a dry loan: the borrowing is supported by the existence and value of the portfolio, not by cash flow from it. From the wealth manager's perspective, AUM is preserved in full.
• Lender selection is critical: Not all lenders accept deemed portfolio income. Identifying the right lender and presenting the case in a way that meets their specific requirements is where specialist mortgage advice adds significant value.

Key Takeaways

This case placed a £2,000,000 interest-only remortgage for a family with a complex income profile using deemed portfolio income to bridge the gap between what conventional income alone could achieve and what the client actually needed.

The wealth manager retained their full AUM. The client avoided a potentially taxable asset disposal. The mortgage was placed cleanly, at a conservative 66% LTV, with a well-evidenced repayment strategy and a product suited to the client's short-term needs.

If you’re a professional adviser with clients in comparable situations (significant property equity, meaningful investment portfolios, complex or variable income, and capital requirements that might otherwise require asset liquidation) we would welcome the opportunity to talk to you about how specialist mortgage solutions can be part of your asset management mix.

To discuss this case or a client situation in confidence, please get in touch.

This is a case study and not indicative of typical results. Past performance is not necessarily representative of future results. This document is intended for professional advisers only and does not constitute advice to end clients.