In today’s complex financial landscape, traditional income-based lending isn’t always the ideal route for high-net-worth individuals. Asset based lending offers a powerful alternative, allowing borrowers to leverage their existing assets to secure mortgages and property funding. For wealthy individuals with significant assets but complex income structures, this approach can unlock property opportunities that might otherwise be out of reach.
At MillionPlus, we specialise in creating bespoke financing solutions for high-value property transactions. Understanding which assets can be used for mortgage security is essential when exploring your options. This guide breaks down everything you need to know about asset based lending and how it could work for your next luxury property purchase.
Looking for expert guidance on financing your next luxury property? Email Paul Welch directly at Paul.welch@millionplus.com for a confidential consultation.
What Is Asset Based Lending?
Asset based lending is a financing method where loans are secured against assets rather than being primarily based on income or credit history. This approach is particularly valuable for:
- High-net-worth individuals with complex income structures
- Business owners with significant wealth tied up in their companies
- International clients with global asset portfolios
- Property investors expanding their portfolios
- Individuals with valuable assets but irregular income streams
Rather than focusing on traditional affordability calculations, lenders assess the value and liquidity of your assets when determining loan eligibility and terms.
How Does Asset Based Lending Work?
Asset backed lending operates on a straightforward principle: your existing assets serve as collateral for your loan. The lender takes a legal charge or lien against these assets, which provides security should you default on your loan obligations.
Here’s a simplified breakdown of the process:
- Asset Valuation: Your assets are professionally valued to establish their worth.
- Loan-to-Value Assessment: The lender determines how much they’re willing to lend against each asset type (typically a percentage of total value).
- Security Arrangement: Legal agreements are established to secure the loan against your assets.
- Loan Issuance: Funds are released for your property purchase.
- Repayment Structure: You’ll either make regular interest payments with a final capital repayment or follow an agreed amortisation schedule.
While this sounds simple, the execution requires expert guidance, especially for high-value transactions. At MillionPlus, we navigate these complexities daily, connecting clients with lenders who understand their unique financial positions. Speak to our financing experts today for personalised advice.
Ready to explore how asset based lending could work for your situation? Create a free account at https://millionplus.com/login-register/ to receive personalized property and financing insights.
Which Assets Can Be Used For Mortgage Security?
One of the most common questions we receive is about which assets lenders will accept as security. While this varies between institutions, here’s a comprehensive overview of commonly accepted assets:
1. Investment Portfolios
Investment portfolios are among the most liquid and therefore most readily accepted assets for securing a mortgage. These include:
- Shares and Equities: Publicly traded stocks on major exchanges
- Bonds: Government and corporate bonds with strong ratings
- Managed Funds: Including mutual funds, ETFs, and managed portfolios
- Private Equity Investments: Though these may be subject to additional scrutiny
Lenders typically offer loan-to-value ratios of 50-70% for investment portfolios, depending on diversification, volatility, and liquidity factors.
2. Property Assets
Existing property equity is a powerful tool for securing additional financing:
- Residential Properties: Your current home or investment properties
- Commercial Properties: Office buildings, retail spaces, or industrial units
- International Real Estate: Properties in stable markets with clear ownership structures
- Land and Development Sites: Particularly those with planning permission
Property typically commands loan-to-value ratios of 60-75%, with premium residential properties in prime locations often securing the most favourable terms.
3. Cash and Fixed-Term Deposits
Cash and near-cash assets provide excellent security options:
- Cash Deposits: In domestic or international accounts
- Fixed-Term Savings: Time-locked deposits with defined maturity dates
- Cash ISAs and Other Tax-Efficient Savings: Though withdrawal restrictions may apply
- Money Market Funds: Highly liquid investment vehicles
These highly liquid assets can often secure loan-to-value ratios of up to 90-95%, making them particularly valuable when structuring asset based lending solutions.
Our team at MillionPlus has secured financing for properties ranging from £1M to £50M+ using creative asset-based structures. Visit https://millionplus.com/financing/ to learn how we can help with your luxury property finance needs.
4. Luxury Assets
For high-net-worth individuals, significant value may be stored in luxury items:
- Fine Art Collections: Authenticated works with established provenance
- Classic Cars and Supercars: Particularly rare or limited-edition vehicles
- Luxury Watches and Jewellery: High-value items with certification
- Wine Collections: Investment-grade wines with proper storage history
- Yachts and Private Aircraft: Although depreciation is a consideration
Luxury assets typically secure lower loan-to-value ratios (30-50%) and require specialist valuation, but can be excellent components of a diversified security package.
5. Business Assets
Entrepreneurs and business owners can leverage their commercial interests:
- Business Equity: Ownership stakes in private companies
- Commercial Equipment: High-value machinery and specialised equipment
- Accounts Receivable: For established businesses with reliable income streams
- Intellectual Property: Patents, trademarks, and other IP with established value
The loan-to-value ratio for business assets varies significantly based on the nature, stability, and growth prospects of the business in question.
Are you an entrepreneur looking to leverage your business assets for property acquisition? Contact our specialist team at Paul.welch@millionplus.com for tailored advice on structuring business asset-backed financing.
6. Single Stocks
For individuals with significant holdings in specific companies, single stock loans can be an incredibly efficient financing option:
- Blue-Chip Stocks: Shares in stable, established companies
- Growth Stocks: Positions in companies with strong upward trajectory
- Restricted Stock: Including executive compensation packages (subject to restrictions)
Blended Facilities: The Optimal Approach
At MillionPlus, we’ve found that the most effective asset based lending solutions often involve blended facilities. Rather than relying on a single asset class, combining multiple asset types creates a diversified security package that can:
- Achieve higher overall loan-to-value ratios
- Reduce risk for both borrower and lender
- Allow for more flexible loan terms
- Optimise tax efficiency and wealth preservation
- Accommodate future changes to your asset portfolio
For example, a client purchasing a £10 million property might secure this with a combination of investment portfolio (£3 million), existing property equity (£4 million), and luxury assets (£3 million) rather than liquidating any single position.
Case Study: Securing a Chelsea Townhouse with Diverse Assets
Let me share a real example of how asset-based lending works in practice. We recently helped a client purchase a £15 million townhouse in Chelsea using a blended approach:
The client, a successful entrepreneur with global business interests, had:
- A diverse investment portfolio valued at £5 million
- Business equity worth approximately £8 million
- A collection of classic cars valued at £2 million
- Limited regular income due to reinvestment in business growth
By structuring a blended facility secured against these various assets, we achieved:
- 100% financing of the property purchase
- No need to liquidate growth-focused investments
- Preservation of the client’s car collection
- Competitive interest rates despite the complex income situation
- A five-year facility with flexible repayment options
This bespoke solution allowed our client to secure their dream property while maintaining their wealth-building strategy. Contact Paul Welch directly to discuss how we might structure a similar solution for your property purchase.
Benefits of Asset-Based Lending
Asset backed lending offers several distinct advantages over traditional mortgage arrangements:
1. Access to Higher Loan Amounts
By leveraging your existing assets, you can often secure significantly larger loan amounts than would be possible through income-based lending alone. This is particularly valuable for high-value property purchases.
2. Flexible Income Requirements
For individuals with complex, irregular, or international income streams, asset based lending removes many of the hurdles associated with traditional mortgage affordability assessments.
3. Portfolio Preservation
Rather than liquidating investments to fund property purchases (potentially triggering tax liabilities), asset-based lending allows you to maintain your investment positions and their growth potential.
4. Speed and Efficiency
Asset-based lending can often be arranged more quickly than conventional mortgages, allowing you to move rapidly when exceptional property opportunities arise.
5. Tax Efficiency
When structured appropriately, asset based lending can offer significant tax advantages compared to asset liquidation strategies. This requires careful planning and professional advice.
Have you found your ideal luxury property? Don’t let financing constraints hold you back. Explore our innovative financing solutions at https://millionplus.com/financing/ or list your property requirements at https://millionplus.com/panel/create/ and let us find the perfect match for your needs.
Challenges and Considerations
While asset based lending offers numerous benefits, it’s important to consider potential challenges:
1. Asset Volatility
Market fluctuations can affect the value of your security assets, potentially leading to margin calls if values drop significantly. This risk can be mitigated through careful structuring and diversification.
2. Interest Rates
Asset-based loans may carry higher interest rates than traditional mortgages, though this varies based on the quality and diversity of the security package.
3. Complex Documentation
The legal framework for securing loans against diverse assets requires comprehensive documentation and specialist expertise.
4. International Complexities
Cross-border asset holdings introduce additional regulatory and legal considerations that must be navigated carefully.
How MillionPlus Can Help
At MillionPlus, we’ve built our reputation on creating innovative financing solutions for high-net-worth individuals. Our expertise in asset-based lending includes:
- Access to Specialist Lenders: We maintain relationships with private banks, family offices, and specialist lenders who understand complex wealth structures.
- Bespoke Solution Design: Every client receives a customised financing strategy tailored to their unique asset profile and objectives.
- International Capabilities: Our team has extensive experience working across multiple jurisdictions and currencies.
- Discrete, Confidential Service: We understand the privacy requirements of high-net-worth clients.
- End-to-End Support: From initial consultation through to completion, we manage the entire process.
Frequently Asked Questions
Can international assets be used for UK property purchases?
Yes, international assets can be used to secure UK property purchases, though additional documentation and due diligence requirements apply. International clients seeking UK property finance is one of our specialities.
How quickly can asset backed lending be arranged?
Timelines vary based on the complexity of your asset structure, but we typically complete arrangements within 3-6 weeks, significantly faster than many traditional mortgage processes.
Is asset based lending only suitable for residential property?
No, asset-based lending can be used for various property types, including residential, commercial, and development opportunities. The underlying assets simply need to provide adequate security for the loan.
What happens if my security assets decrease in value?
Most lenders build in a buffer to accommodate market fluctuations. However, significant value decreases might trigger a margin call, requiring additional security or partial loan repayment. We structure facilities with these considerations in mind.
Can I still use my assets while they’re securing a loan?
Generally, you retain the beneficial ownership and use of your assets, though there may be restrictions on selling or transferring them while the loan is outstanding. Specific arrangements vary by lender and asset type.
Do you have specific questions about using your unique asset portfolio for property financing? Our team specializes in creating bespoke solutions for complex wealth structures. Email Paul.welch@millionplus.com for answers to your individual situation.
Conclusion
Asset based lending represents a sophisticated and flexible approach to property finance that’s particularly well-suited to high-net-worth individuals. By leveraging your existing assets rather than liquidating them, you can preserve wealth, maintain investment growth potential, and secure exceptional properties that might otherwise be beyond reach.
For personalised advice on asset backed lending and how it might apply to your next property purchase, contact Paul Welch directly. With expertise in financing luxury assets and properties worldwide, our team is uniquely positioned to create the optimal solution for your needs.
Ready to take the next step?
- List your property requirements and let us find your perfect match
- Explore our financing options for high-value property transactions
- Create your free account today to stay updated on exceptional property opportunities and receive tailored financing insights
Don’t let traditional financing constraints limit your property ambitions. With MillionPlus, you gain access to innovative asset based lending solutions tailored to your unique wealth structure.
