More wealthy homeowners keen to remortgage for family tax planning following Labour's election

by Aaron Strutt

Oct 18 2024

Trinity Financial's brokers have spoken to more clients looking to remortgage for tax planning purposes, particularly since Labour won the election.

Some lenders are more flexible than others in issuing mortgages to applicants who want to raise funds to put into tax structures like family trusts or properties held for tax efficiency.

While lenders generally avoid involvement in direct "tax planning," they offer remortgaging products that can align with tax strategies if structured correctly using interest only or shorter mortgage terms. Here are some types of lenders and specific considerations for those looking to remortgage with a tax planning focus:

Aaron Strutt, product director at Trinity Financial, says: "When looking to remortgage for tax planning purposes, some lenders are more flexible than others in supporting complex structures like family trusts or properties held for tax efficiency. While lenders generally avoid involvement in direct "tax planning," they offer remortgaging products that can align with tax strategies if structured correctly."

Here are some types of lenders and specific considerations for those looking to remortgage with a tax planning focus:

1. Private Banks and Wealth Management Lenders

Features: Trinity Financial's mortgage advisers often work with private banks when wealthier clients want to raise funds for trust structures and tax considerations as they cater to high-net-worth individuals with complex financial arrangements.

Advantages: These institutions provide tailored mortgage products, potentially including interest-only options, which may work well with tax planning strategies focused on cash flow management.

Typical Clients are individuals with high-value properties, investment portfolios, or family trusts. When assessing eligibility, private banks often consider the broader financial picture, including assets held within the trust.

3. Specialized Buy-to-let Lenders for Complex Ownership Structures

Features: Specialist buy-to-let lenders often serve clients with less common ownership structures, such as family trusts, special purpose vehicles, and partnerships. They tend to be more flexible than mainstream banks regarding underwriting criteria.

Advantages: Willingness to work with unusual arrangements, including family trusts and buy-to-let properties owned by trusts. They may also offer interest-only or part-interest and part-capital repayment options, which can support tax-efficient cash flow.

Typical Clients: Families with properties held in trust or limited companies who need flexible remortgage terms.

4. Specialist Mortgage Advisers like Trinity Financial

Features: Specialist mortgage advisors, like Trinity Financial, work with a range of lenders to find bespoke mortgage products that match complex tax and financial needs. They often have access to niche lenders and can structure mortgages to meet trust and tax planning goals.

Advantages: Our advisors know lenders who are open to family trusts and tax planning arrangements. They can help negotiate flexible mortgage terms or guide you to which lenders are interested in specific arrangements like discretionary or family trusts.

Typical Clients: High-net-worth individuals, trusts with multiple beneficiaries, and those requiring bespoke mortgage terms tailored for tax planning.

5. Mainstream Banks with Flexible Remortgage Options

Features: Some mainstream banks offer remortgage products with flexible repayment options, such as interest-only, that can indirectly support tax planning by allowing for more efficient use of funds.

Advantages: Mainstream banks may not directly support tax planning but offer cost-effective remortgaging solutions that indirectly aid cash flow planning in a family trust.

Typical Clients: Those with simpler trust arrangements looking for competitive rates may not need highly specialized lending solutions.

Key Considerations When Remortgaging for Tax Planning with a Trust

Interest-Only Loans: Interest-only remortgaging is often advantageous for trusts as it helps maintain liquidity.

Mixed-Use or Portfolio Mortgages: For trusts with multiple properties, lenders offering portfolio mortgages can simplify and centralize debt while potentially creating additional tax efficiencies.

Broker Consultation: Given the complexity of family trust arrangements, it is advisable to work with a specialist broker familiar with tax planning and trust structures. They can ensure compliance while helping find suitable products.

A careful review of the mortgage terms, tax implications, and the trust’s objectives will help ensure the remortgage product aligns with tax planning and asset protection goals.

Call Trinity Financial on 020 7016 0790 to secure a mortgage, book a consultation, or complete our mortgage questionnaire. 

The information contained within was correct at the time of publication but is subject to change.

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