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These are personal asset loans that allow any luxury asset to be used for collateral - resulting in fast, flexible financing of luxury goods or, perhaps, for property development. Its purposes are numerous and diverse, yet it differs from conventional bridging in some important ways.
A luxury asset loan is a type of personal loan, it works similarly to bridging; a short-term secured loan allows a borrower a lot of money quickly and at short notice.
While the mechanics of luxury asset finance is similar to that of bridging loans, the uses of the capital raised are most often directed to other high-value assets. Asset finance of this nature tends to be best utilised by high-net-worth individuals who own valuable portfolios already encompassing luxury assets or property.
Asset finance is mainly to quickly deliver equity from a luxury asset, for liquidity and free up capital to be spent elsewhere – usually on another luxury asset.
As stated above, these are short-term loans that are asset-backed and are typically secured by an asset of significant value.
An application must be made for the purposes of the loan, detailing the security offered and the intended exit strategy. Lenders can vary on the necessary criteria for bridging loans, a property typically secures standard loans for short-term finance.
The difference with luxury asset finance is that it can also be secured with numerous luxury assets and incorporate property if necessary.
These standard bridging loans can often require detailed information from the borrower – credit checks, or general scrutiny may fall on the borrower to provide certain information to assure a lender.
A luxury asset loan differs because there aren’t the same restrictions or scrutiny placed on the borrower. Lenders are flexible, and the only criteria is to assess the luxury asset offered as security. Funding can be secured quickly and with as little paperwork as possible.
· A high-net-worth individual may own a valuable luxury/classic car.
· They intend to borrow against this asset – releasing the equity in a high-value car, and securing an asset-backed loan, to diversify their portfolio.
· They secure the loan; their asset is taken into the possession of the lender (sometimes this is not necessary) and with the capital purchase a different luxury asset.
· High-net-worth individuals may have unique exit strategies, as they can likely repay the loan via their personal income or any other available method.
· The individual repays the loan and has diversified their valuable portfolio
· The loan has allowed them access to the equity of the original asset, despite having a cash shortfall before the loan.
Luxury asset finance is primarily for high-net-worth individuals, who will already own diverse and valuable portfolios containing luxury assets. It is first and foremost, a short-term loan for asset-rich individuals.
As a result of luxury asset finance, these individuals maintain liquidity while having the means to sustain a high-flying lifestyle.
They may wish to make better use of their assets without simply selling them. Luxury asset finance provides a simple and effective way to diversify during periods when cash may be wrapped up in numerous assets.
The benefits of choosing asset finance are:
Of course, there must be a sufficient exit strategy in place, but due to the targeted demographic of luxury asset finance, a high-net-worth individual would be able to repay the loan through many methods (and usually as quickly as possible to negate higher interest payments) – forms of repaying the loan may come through income, or business sales, or property sales etc.
Additionally, this type of finance can also work in the traditional bridging way. It can be useful for property finance, specifically for property developers and investors.
The funds from the loan can be used to resolve cash shortfalls when it comes to financing property projects, encompassing renovations, self-builds or general property development. This is the flexibility of luxury asset finance, as it can be utilised in many different ways suited to the borrower.
The types of luxury assets that can be used are varied. Anything can be used as collateral if it can be evaluated and is of significant value.
Assets might include, but are not limited to:
The value of such assets will be varied, and evaluated on a case-by-case basis – there is no simple answer for what luxury goods can be used as collateral, besides the fact that they must be highly valued items.
With luxury asset finance, a considerable amount of the typical fees – such as legal or valuation fees - that come with short-term loans are not applicable. Meaning it can be inexpensive, all things considered, to apply for and take out a personal asset loan.
However, what remains true, is the higher interest rates – luxury asset finance is still a short-term loan, so interest rates reflect this fact.
This can be mitigated somewhat by “Rolled-up” interest. Interest will only be paid on the duration the loan is outstanding; these will be monthly payments. Meaning, if you have the ability to repay as quickly as possible, you will bypass extended interest payments on the loan.
For high-net-worth clients, it can be less of an issue to repay within a shorter time, before the full term of the loan. Therefore making luxury asset finance the best method for diversifying a portfolio, and acquiring liquidity from your own assets quickly and flexibly without worrying about mounting monthly costs.
Interest rates applied to the actual loan can also be affected by lenders' criteria and several other factors, such as;
• Your loan size, and for how long it will last
• What type of loan you need
• The Loan-to-value ratio (LTV) - you can borrow based on the lender's LTV, which is calculated by dividing the loan amount by the securities value – the security valuation will impact the interest paid monthly.
• The valuation of your asset(s) – a lender’s evaluation takes into account many factors, and what your asset is valued at will affect the interest rate – location of a property can have an impact on valuation, for instance.
Luxury asset finance is not typically offered by banks, and you wouldn’t be able to secure these types of loans from high-street banks. Specialised lenders only offer them due to the nature of high-value collateral.
This is beneficial, as mainstream lenders do not typically allow flexibility or specialised circumstances incorporated into a short-term loan. However, applying for luxury asset finance will require finding a lender to meet your needs.
At Clifton Private Finance, we help clients find suitable lenders for their circumstances. For luxury asset finance, it is best to seek out experienced finance brokers that can aid you in finding the best possible deal.
It is useful to navigate the entire short-term market and pinpoint the best asset finance available while avoiding common pitfalls. With the help of a broker, the process will be greatly expedited.
For the inexperienced, this can be challenging to do alone. Here’s what an experienced broker can do for you when it comes to applying;
With a specialist broker, you can get the advice needed to point you toward the best deal in luxury asset finance. It can save time and often skip over any challenges presented by going to lenders directly.
We have access to the short-term loan market and have established relationships with specialist lenders. And most importantly, we can help you get your luxury asset finance at a favourable rate.
Are you in need of asset finance? Get in contact with our team, and we can help you navigate the process quickly and without stress.
Short-term loans, such as asset finance, offer speed and flexibility when it comes to solutions; resolving cash flow problems, making the most out of your assets when liquidity is an issue, or perhaps, simply utilising luxury asset finance to purchase additional assets.
With our experience in short-term financing, we can assist you in finding the right loan for your circumstances.
We have an extensive network of lenders we deal with regularly, who specialise in this kind of asset finance.
I approached Clifton Private Finance to help me get a mortgage as an Expat working in the Far East. I would normally 'cut out the middle man' on something like this and try to get myself a deal directly with the banks, but I am now sold on the broker concept and wouldn't hesitate to use Clifton Private Finance again. There were a number of complicating factors such as being an expat, the stamp duty holiday, the sheer amount I wanted to borrow and the fact I wanted it all wrapped up before the Stamp Duty holiday ended. It is clear to me now that the relationship that brokers have managed to foster with their banks means they can simply pull levers and make stuff happen that us ordinary folk cannot. Put simply, they are worth every penny, will take most of the stress out of the lending process, and seem to have access to deals that you just won't find on the internet. Thank you George and Jan for all your hard work!
Luther was excellent. Very clear in his advice and explanations of products and was able to move things on very quickly when we ran into difficulties with the estate agents. Without a doubt I would recommend Luther to all friends, family and colleagues. Luther was a joy to deal with and took a lot of the stress out of a troublesome transaction, from my end. I would view Luther as real asset to Clifton Private Finance Ltd.
The team at Clifton Private Finance has been outstanding, not only in helping me to obtain a mortgage on a slightly unusual home, but also in continuing to provide support and liaise with the lender and solicitors through to completion. Thank you for making the process of buying my first home much easier.
Sam O'Neill, and the new lender he identified for me, worked tirelessly together using my time constraints, to make sure my mortgage application was completed on time. They are a brilliant company to work with, fast, efficient, open and transparent from the very beginning, and turned a seemingly impossible situation into a viable one. Sam was brilliant throughout the whole process and I would highly recommend him, and his colleague Helen, to anyone without hesitation, I cannot speak highly enough about them.
I was incredibly lucky to find Clifton Private Finance after a search on line as their service has been more than exemplary. My point of contact was Sam 0’Neill and he was happy to help at every stage during the application of the bridging loan, making a stressful process much easier to deal with. He was always available by phone or email and gave prompt answers to queries I had as well as always getting back to me when he said he would. That to me is excellent customer service and I cannot thank him personally or the company enough for the support they have given me.
Adam cannot thank you enough for all your support throughout this arrangement. You have gone more than the extra mile to support us. Without you we would not have got our dream retirement home. You have been most professional and personable. Liz and I would be more than happy if you wanted to use us a reference with respect to any future clients.
Nigel & Liz K - Bristol
You have certainly shown me that you do everything for your clients, including tolerating their excessive emails and questions for updates. I have been kept in the loop, from yourself, about why the delays were occurring (Nationwide, post etc) which I would like to highlight that I really appreciated. I certainly will be able to recommend you to others as and when the need arises.
I recently contacted Clifton Private Finance after a Google search for bridging finance providers and was immediately struck by their efficiency and support. Forms were emailed over almost immediately and the necessary finance was arranged within a few days. None of the other companies I contacted came close to their professionalism, and the quote that I eventually received was impressive. Thank you Adam, your help has enabled us to reserve the house that we wanted and I certainly recommend you to others.
Mr M. R. - Oxford
Absolutely brilliant. The service was first class, got everything sorted efficiently and were always friendly. Any fees were negligible compared to the service offered. Robert was particularly outstanding.
My advisor, Robert, was very helpful in finding the mortgage to suit me. He kept me up to date throughout the process and dealt with any issues when they arose.