Times: Banks accepting houses and horses as collateral - Spear's Magazine

Times: Banks accepting houses and horses as collateral

They were once seen simply as luxuries for the rich and (sometimes) famous yachts, racehorses, even private aircraft, the kind of thing that no self-respecting multimillionaire would be without but the wealthy have discovered an unexpected bonus from their executive toys. They are using them as security for loans so that they do not have to find large amounts of cash for a deposit when buying a new home.

They were once seen simply as luxuries for the rich and (sometimes) famous — yachts, racehorses, even private aircraft, the kind of thing that no self-respecting multimillionaire would be without — but the wealthy have discovered an unexpected bonus from their executive toys. They are using them as security for loans so that they do not have to find large amounts of cash for a deposit when buying a new home.

The private banking divisions of lenders such as HSBC, Barclays and Coutts are now routinely accepting security on other assets from high-net-worth customers in lieu of cash deposits, allowing them to borrow more to buy property at low interest rates.

These assets can include bonds, shares and antiques, according to Knight Frank Finance, the broker that arranges mortgages often worth more than £2 million. It said that the method had become particularly popular with wealthy foreign buyers, who are purchasing a home in the UK but wish to avoid paying tax on money brought into the country.

Yet Britons, too, have seen the merits of the practice. The broker said that it had arranged such mortgages for UK-based clients including bonus-earners. It expected bankers, who may be asset-rich but cash-poor after the tax crackdown on their bonus earnings, to take greater advantage of such deals, enabling them to buy expensive property despite lower earnings.

To read the full story, visit timesonline.co.uk



 

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