"Synthetic" Mortgages

Strategic Credit Solutions

 "Synthetic" Mortgages

Wealth Advisors are often called upon to guide their HWN or UHNW client families through the home acquisition process.  Cash or the traditional bank "mass market" mortgages (with HWN client features) are the most often used methods of financing such a purchase.
Continuing my discussion of Strategic Credit Solutions as alternatives to the norm that can create measurable Economic Benefit for the client, this post will illustrate a solution I call the "Synthetic Mortgage" (click on any highlighted text). Synthetic in that it can be structured in term and repayment to look and act like a traditional mortgage while typically costing the client far less and creating the opportunity to maintain investments that would otherwise be liquidated to cover the "lender required" down payment.  This Economic Benefit can be quantified based on unique client circumstances.
Research shows that Americans hold their homes, on average, about seven years and refinance those they hold longer even more often than that.  On average second and third homes are typically held for even shorter periods.  That said,  even HNW or UHNW clients often think only in terms of 15/30 year fixed rate loans.  Even when opting for a shorter term "adjustable rate" mortgage, the loans' closing costs and origination fees create an unnecessary economic burden for the HNW or UHNW client.
When Advisors observe this client behavior (real estate purchase) suggesting a Strategic Credit Solution may add value to their relationship.
The Synthetic Mortgage strategy I discuss in this linked presentation (click here and then "download" for best viewing) can be structured as a stand alone credit facility or as an advance under the "Family Bank" strategy I will discuss in my next
post.  As part of the Family Bank strategy multiple generations within the family, all with different income levels and tax requirements, may benefit economically from facility structural variations designed to take advantage of each generation's needs. 

 Your past "likes" and "comments" have been most welcome and appreciated.  I look forward to more. 

Don't hesitate to contact me directly for deeper discussion on how my approach Strategic Credit production can drive your Private Wealth Division's profitable growth.  

Mark S. Johnson
404.909.5167