When the Deposit Isn’t the Problem, the Income Structure Is

A client came to me looking to purchase a second home in France. On paper, the financial position was strong: a senior executive role with a global company, substantial earnings and an established investment portfolio.

In practice, those circumstances were exactly what made the mortgage more complicated.

The client’s remuneration did not resemble a conventional salary structure. A significant proportion of annual earnings came through bonuses and equity-based compensation rather than base salary. This type of remuneration is increasingly common among senior executives, particularly in the technology and financial sectors, but lenders can take very different approaches to assessing it.

For a non-resident purchasing property in France, that difference becomes particularly important. Some lenders take a conservative approach to variable remuneration, potentially averaging or discounting bonuses and applying different criteria to equity-based compensation. Combined with non-resident status and a euro-denominated property purchase, the number of appropriate lending options can narrow considerably.

The challenge was therefore not simply the amount of deposit available. It was finding a lender prepared to assess the client’s broader financial position rather than relying predominantly on conventional salary-based affordability.

We approached a private banking lender experienced in working with international high-net-worth clients and more complex remuneration structures. The lender was able to consider the client’s wider financial profile, including bonus history, equity-based compensation and investment assets, as part of its assessment.

However, the level of borrowing required meant that additional security was needed.

One option would have been for the client to increase the cash contribution towards the purchase. Instead, we structured a pledge over part of the client’s existing investment portfolio as additional security for the facility. This provided the lender with further comfort around the overall leverage while avoiding the need for the client to increase the cash deposit or liquidate investments specifically to fund the purchase.

The resulting structure provided a circa €1.26 million mortgage, representing approximately 90% of the property purchase price, subject to the additional portfolio security and the lender’s individual requirements.

The facility was arranged within the required timeframe, allowing the client to proceed with the French second home purchase while retaining the underlying investment portfolio, with a proportion pledged as security.

Cases like this demonstrate why complex-income mortgages are rarely determined by one number on a payslip. For high-net-worth borrowers receiving bonuses, equity-based compensation or income from several sources, the lender’s approach to underwriting can be just as important as the strength of the client’s overall financial position.

The solution is not necessarily a larger deposit. Sometimes it is about finding a lender capable of understanding the whole balance sheet and structuring the security appropriately.

If your income does not fit neatly into a conventional mortgage application, the starting point is a conversation about the complete financial picture.

Disclaimer

This article is provided for information and illustrative purposes only and does not constitute financial, investment, tax or legal advice. Lending is subject to individual circumstances, lender criteria, valuation, underwriting and approval. The availability of high loan-to-value lending and portfolio-backed structures will depend on the borrower’s circumstances and individual lender requirements.

Where investment assets are pledged as security, their value can rise or fall. A fall in the value of pledged assets may result in additional security or capital being required and could ultimately result in assets being sold. Enness does not provide investment advice.

Your home or property may be repossessed if you do not keep up repayments on a mortgage or other debt secured against it.

Enness Global is a trading name of Enness Limited, a credit broker, not a lender. Enness Limited is authorised and regulated by the Financial Conduct Authority (FCA reference 565120). Certain international mortgage and lending activities may fall outside the scope of UK regulation.