Mortgage market conditions affecting mortgage backed securities in the secondary market and other credit instruments and derivatives have significantly impacted the ability of most lending institutions to fund super jumbo mortgage loans. Institutional lenders have responded by dramatically increasing the minimum down payment as well as have required that borrowers’ incomes be fully documented. Pledged asset mortgages and other niche, private mortgage banking products have seen a tremendous resurgence in demand as a result of the conventional lending industries current lack of offerings.
Pledged Asset Mortgage programs are an amazingly effective alternative to liquidating assets in your portfolio to cover the normal down payment required on a jumbo, super jumbo or ultra jumbo residential mortgage. Luxury Mortgage Group’s pledged asset loan program lets you finance up to 100% without liquidating any of your assets. Pledged asset mortgages enable affluent borrowers to purchase luxury real estate properties with little or no money down without incurring withdrawal penalties, losing income from existing investments or capital gains taxes.
Pledging part of your assets can also save thousands of dollars a year by allowing you to eliminate the need for private mortgage insurance or costly high interest second mortgages. Even though traditional banks and mortgage brokers rarely offer pledged asset mortgage loan programs, they are readily available through Luxury Mortgage Group, who specializes in handling high net worth clients. This program is ideal for clients who wish to defer capital gains or losses while maintaining their investment strategy. You can even help a friend orfamily member purchase a home by pledging assets on their behalf.
The days of traditional 100% financing are now gone for luxury home loans. On most jumbo purchases, Banks and traditional lenders will ask you to give a sizeable down payment. Few borrowers keep large portions of cash in checking or savings accounts earning little to no interest. Instead, affluent borrowers invest their assets in investment portfolios with higher rates of return substantially in excess of the interest they will pay on a luxury mortgage loan. To pay for the down payment normally requested by a traditional lender, borrowers must then liquidate part of their portfolio but this can result in significant short term capital gains taxes, withdrawal penalties and thus drastically increase the actual cost of the cash down payment.
What are the benefits of a Pledged Asset Mortgage?
1. No down payment
2. Avoid capital gains taxes caused by the usual process of converting your portfolio to cash
3. Utilize arbitrage to keep the income difference between your investment returns vs. your lower mortgage interest
4. Eliminate private mortgage insurance and second mortgages at higher interest rates
5. Gain the tax benefits of having a mortgage
6. Retain control of your investment portfolio
7. Continue investing instead of having cash sitting idle as real estate equity
How Does a Pledged Asset Mortgage Work?
In example, let’s assume you’re buying a 5 million dollar penthouse. Most lenders will require that you put down 30% of the sales price of the unit, or $1.5M. This would require you to liquidate $1.5M from your bank account or investment portfolio. If withdrawn from your investment portfolio, this could cost you approximately $2,175,000 after adding in potential short term capital gains taxes, penalties for withdrawal and other fees associated with turning your investments into cash. Utilizing Luxury Mortgage Group’s pledged asset program, you can instead pledge, $1.5M of your portfolio as collateral for the loan. Your assets pledged as collateral can be stocks, mutual funds, bonds, ETFs, certain exchange traded commodities, bank CD’s and other similar investments. Luxury Mortgage Group will then have a vested interest in your pledged assets, however you will retain control of your assets and can continue to buy or sell, trade or take generated income , be it divided, interest or capital gains so long as your account balance doesn’t fall below the amount you have pledged. With this unique program, you gain the flexibility of not having to liquidate your portfolio, you have the ability to still take gains from your investments, you get the tax benefits of having a mortgage and you never lose control.
For more information about how pledged asset mortgages can help make your next $1 million to $50 million dollar luxury home purchase or jumbo cash out refinance with no money down, contact the super jumbo mortgage expert, Jason Fox, President of Luxury Mortgage Group at 702-444-0400 x1 or by email at: JFox [at] LuxuryMortgageGroup.com
You can also continue on to our 2 minute mortgage pre-approval form or complete our full online mortgage application.
Tags:
Posted in Pledged Asset Mortgages · Super Jumbo MortgagesNo Comments
0 responses so far ↓
There are no comments yet...Kick things off by filling out the form below.