Mid-Market PE Director Secures £1.6m Mortgage on £2.1m Home Using Co-Investment Equity
A director at a mid-market private equity (PE) firm needed £1.6m for a £2.1m family home. On salary and bonus, even an enhanced multiple reached £1,425,000. A private bank read his co-investment equity as part of the whole financial picture, recognised three years of crystallised gains, and the loan completed at roughly 4.3 times recognised income.
Client Snapshot
£2,100,000
Purchase price
£1,600,000
Mortgage amount
Just over 76%
Loan to Value (LTV)
Director at a mid-market private equity buyout firm · Four-bedroom family house, South West London · £500,000 deposit · Capital and interest, five-year fixed rate
Key constraint
Needed a lender willing to read the co-investment as income and balance-sheet strength, with £100,000 of the current fund commitment still to be called
Context
A decade at the same mid-market buyout firm had taken the client from associate to director, and the firm’s co-investment programme had travelled with him: personal capital committed alongside each fund as a condition of seniority. His stake in the 2019-vintage fund, now deep in its realisation phase, had begun returning money in earnest, with gains crystallising in each of the last three tax years; together with his stake in the current fund, his co-investment equity stood at around £400,000, with £100,000 of the current commitment still to be called. With a second child arriving in the autumn, the family had outgrown their flat: a £2.1m four-bedroom house in South West London was agreed, with the £500,000 deposit funded by the flat sale and cash savings. His own bank had already run the numbers on salary and bonus and stopped well short of £1.6m.
The Challenge
The gap was structural. A mainstream affordability assessment runs on visible cash income: salary, plus a proportion of bonus (commonly around half, though treatment varies by lender). On that basis, recognised income was £237,500: the £200,000 salary plus 50% of the £75,000 two-year average bonus. At 4.5 times income, that supports around £1,068,750 of borrowing, and even a lender potentially applying an enhanced multiple of up to 6 times would reach £1,425,000. The £1.6m target sat £175,000 beyond the top of that range.
Please note: These figures are for illustrative purposes only. The actual amount you can borrow will depend upon your personal circumstances, credit profile, LTV, the lender’s individual criteria and a full affordability assessment.
The client had the income to close the gap, but it did not arrive through payroll. The 2019 fund’s realisations had produced crystallised co-investment gains of £85,000, £95,000 and £120,000 across the last three tax years, flowing through self-assessment. A capital call is not a credit commitment, and most mainstream lenders may not recognise co-investment at all, as either asset or income. The few that may consider investment-type income can require three years of tax calculations (SA302) with anything judged speculative excluded, a filter fund distributions frequently fail.
The mechanics are covered in our article on co-investment and your mortgage →
Most of the mainstream market was ruled out at the first pass. It needed a lender able to read fund-linked income and fund-linked wealth as one picture.
Our guide to large loans (£1m+) → covers where that kind of lending sits.
Director and Mortgage Adviser
Specialist mortgage broker for City professionals. 10+ years advising private equity professionals on structuring mortgages around fund-linked compensation, where co-investment, carried interest and drawings are read very differently from salary.
Lender Strategy
That pointed to a short list of private banks and specialist desks that may assess PE compensation holistically, reading salary, bonus, distributions and the balance sheet together.
Our guide to mortgages for private equity professionals → explains how that assessment works across the profession.
The discovery work mattered as much as the placement. Because a capital call may not appear on a credit search, and a standard application may not ask about it, the £100,000 still to be called on the current fund was the kind of obligation a lender could have discovered late, or not at all. It was disclosed up front with a funding plan: calls met from future bonus receipts, so that neither the deposit nor the distributions being used for affordability were counted twice.
The case was placed with a private bank whose credit process reads fund interests as part of the whole financial position. On that assessment the distributions counted. Three years of tax calculations (SA302) and Tax Year Overviews (TYOs) evidenced crystallised gains of £85,000, £95,000 and £120,000, a three-year average of £100,000. All of it had been received as cash, over and above the capital the fund returned alongside it; that returned capital was treated as liquidity, not income. The bank took the £75,000 two-year average bonus in full given its consistency, and alongside the £200,000 salary, recognised income became £375,000. The £1.6m loan sat at roughly 4.3 times that figure, with around £400,000 of co-investment equity behind the case as balance-sheet strength; none of it was needed for the deposit.
Worked example, the same income read two ways
PE director, £200,000 salary, £75,000 average bonus, £100,000 average crystallised gains
The same director, assessed two ways.
- Salary
- £200,000
- Cash bonus (two-year average)
- £75,000
- Crystallised co-investment gains (three-year average)
- £100,000
- Co-investment equity (two vintages)
- Around £400,000
- Uncalled commitment
- £100,000
- Buying at
- Just over 76% Loan to Value (LTV)
£200,000 salary plus 50% of the £75,000 average bonus = £237,500 recognised. At 4.5× that supports around £1,068,750; even an enhanced multiple of up to 6× reaches £1,425,000. The co-investment layer is not counted.
£200,000 salary plus the £75,000 bonus in full plus £100,000 average crystallised gains = £375,000 recognised. £1.6m sits at roughly 4.3× that figure.
Same income, assessed two ways. The borrowing range runs from £1,425,000 to £1,600,000, driven by what the assessment recognises.
Please note: These figures are for illustrative purposes only. The actual amount you can borrow will depend upon your personal circumstances, credit profile, LTV, the lender’s individual criteria and a full affordability assessment.
The application was packaged so a credit team could trace every figure first time: fund administrator statements showing each commitment, the call history and the distribution history; the three years of tax calculations (SA302) with corresponding Tax Year Overviews; payslips and P60s for the employment income; and a short covering note making the central point explicitly: the distributions were not a windfall but the normal output of a maturing fund vintage, with further vintages behind it.
The Result
The Result
A £1,600,000 mortgage agreed at just over 76% LTV, with the co-investment programme untouched
£1,600,000
Loan
Just over 76%
LTV
£375,000
Recognised income (salary + bonus + crystallised gains)
Roughly 4.3×
Income multiple
First call
Day 0
Credit-approved offer
Just over 4 weeks
Completion
8 weeks after offer
Co-investment programme
Unchanged
A £1,600,000 mortgage was agreed at just over 76% LTV, capital and interest over 27 years on a five-year fixed rate, on terms in line with private-bank pricing at this loan size. First conversation to credit-approved offer took just over four weeks, and completion followed eight weeks later. The monthly commitment was sized to be met from salary and bonus alone, so the distributions supported the loan size without being needed month to month. Nothing about the co-investment programme had to change: no stake was sold, and the £100,000 still to be called stayed exactly where it was.
For how this route works more broadly, see our guide to private bank mortgages →
Why This Matters for Similar Clients
PE professionals at director level often sit in a specific gap: too senior for salary-and-bonus sizing to cover the home they are actually buying, too early for carried interest to help. Co-investment is frequently the layer that closes it, in crystallised cash that a standard application rarely surfaces because no one asks. Closing the £175,000 gap in this case came down to lender selection and evidence.
What We Can Do for You
- Establish before any application how each layer of your compensation (salary, bonus, co-investment distributions, carried interest) may be read, and which layers the case actually needs
- Match your profile to the private banks and specialist desks that may assess fund-linked income holistically
- Package fund administrator statements, tax calculations (SA302) and Tax Year Overviews so a credit team can trace every figure first time
- Structure the borrowing around your capital call schedule, so uncalled commitments are planned for before a lender asks
FAQs
At most mainstream lenders, generally not: fund distributions sit outside salary-and-bonus assessment, and investment-type income routes can exclude anything judged speculative. A lender assessing the case holistically (in practice mainly private banks and specialist desks) may recognise the crystallised gains within them, given a multi-year track record.
A capital call is not a credit commitment, so it may not appear on a credit search and a standard application may not ask about it. It still matters: uncalled commitments shape cash flow, and disclosing them with a funding plan can strengthen a case rather than weaken it.
No. Co-investment is your own capital invested alongside your firm’s funds; carried interest is a share of fund profits. Lenders may treat them differently: crystallised co-investment gains with a track record may be easier to evidence than carry, which may be excluded altogether.
Generally not at mainstream lenders: the holding is illiquid and contingent, so it may not count towards deposit or reserves. A private bank may read it as net-worth context in a holistic assessment, which can strengthen the overall case without changing the deposit arithmetic.
Not necessarily. Where salary and bonus alone reach the borrowing target, a mainstream route may fit, with the co-investment left out of the assessment entirely. Where fund-linked income is needed to close the gap, the holistic routes sit mainly with private banks and specialist desks.
Related Case Studies
YOUR HOME MAY BE REPOSESSED IF YOU DON’T KEEP UP REPAYMENTS ON YOUR MORTGAGE
Kite Mortgages is a trading style of Kite Financial Ltd which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.
APPROVED BY THE OPENWORK PARTNERSHIP ON 29/07/2026
This client scenario is an amalgamation of cases we have handled. Details have been combined and adjusted to protect client confidentiality, and it does not describe a single client or transaction.