Private Equity VP Secures £1.9m Mortgage on £2.4m Purchase Despite Irregular Carry Payments
A Vice President at a mid-market private equity fund secured a high-value residential mortgage using salary and bonus income, with the structure designed to remain affordable today and adapt as carried interest crystallises in future years.
Client Snapshot
Profession: Vice President, mid-market private equity fund
Location: London
Property Type: Family home
Purchase Price: £2,400,000
Mortgage Amount: £1,900,000
Loan-to-Value: c.79%
Income Structure:
£250,000 base salary
Annual bonus
Carried interest (future, irregular)
Repayment Structure: Part interest-only
Key Considerations: Carry excluded from affordability, costs managed through term and structure
Context
The client was purchasing a long-term family home while progressing through a senior role at a private equity fund. Core remuneration consisted of base salary and annual bonus, with carried interest expected to form a meaningful component of future wealth but paid irregularly and linked to fund realisations.
The priority was to secure the property now, while ensuring monthly commitments were comfortably affordable based on regular and semi-regular income, without relying on speculative future carry payments.
The Challenge
Carried interest is typically excluded from mortgage affordability due to its:
Irregular timing
Dependence on fund exits
Uncertainty at application stage
Excluding carry entirely, however, can place pressure on affordability where loan sizes are high. In this case, relying solely on salary and bonus without structural adjustment would have resulted in higher monthly commitments than the client was comfortable with during the early years of the fund lifecycle.
The challenge was to design a mortgage that worked before carry crystallised, while remaining well-positioned for significant income events expected later.
Lender Strategy
Lenders were assessed based on their experience with private equity remuneration and their flexibility around loan structure rather than headline income multiples.
Affordability was modelled conservatively using salary and bonus income only, with no reliance on carried interest. To keep monthly outgoings aligned with regular income, the mortgage term was extended and a part interest-only structure introduced.
A five-year product was selected to provide certainty of monthly payments during the period when income was limited to salary and bonus. This timeframe aligned with the fund’s anticipated disposal cycle, at which point significant carry payments were expected.
Several lenders were ruled out early due to inflexible views on bonus income or limited appetite for part interest-only borrowing at higher loan sizes.
What We Can Do for You
Structure private equity income conservatively without relying on carry
Use term and interest-only elements to manage early-stage cash flow
Align mortgage product choice with fund lifecycle and carry timing
Design borrowing that can be paid down materially as income events occur
The Result
A residential mortgage of £1.9m was secured to support the £2.4m purchase, structured with an extended term and a part interest-only element.
Monthly payments were kept comfortably affordable based on salary and bonus income alone, with certainty over outgoings for the first five years. The structure allows for significant capital reduction once carry payments are realised, without forcing a premature refinance.
Why This Matters for Similar Clients
Private equity professionals often feel caught between excluding carry entirely and waiting years before making major purchases. In practice, borrowing can often be structured to work today, while anticipating known future income events.
Aligning mortgage structure and product length with fund timelines can provide affordability now and flexibility later, without relying on uncertain projections.
Request your fee free mortgage consultation today. No obligation, just sound advice.
FAQs
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Generally no. Carry is usually excluded due to its irregular and fund-dependent nature.
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By adjusting term length, using part interest-only structures, and selecting lenders comfortable with bonus income.
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It can provide payment certainty during periods where income is limited to salary and bonus, while aligning with expected future income events.
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Yes. Once carry payments crystallise, many borrowers choose to make significant capital repayments or restructure the loan.
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14 Apr - Written By David Walsh
YOUR HOME MAY BE REPOSESSED IF YOU DON’T KEEP UP REPAYMENTS ON YOUR MORTGAGE
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