It seems that even wealthy people need mortgages with news that hip-hop star Jay-Z and his singer wife Beyonce financing the purchase of their $88m Los Angeles mansion with a whopping $52.8m mortgage.
A 60 per cent loan-to-value mortgage is pretty high, taking into account the quantum of the loan. Lenders – in the UK, this would undoubtedly be a private bank – would normally limit LTVs on such a loan size to circa 40 to 50 per cent. In terms of the monthly cost, assuming a pay rate of 3 per cent, the couple would pay $132,000 per month on interest only or $250,000 on a repayment basis.
Assuming an income multiple of five times income, we can also assume that the couple have a minimum annual income of $10.56m.
It is likely that the bank would insist on having assets under management (AUM) for a loan this size so it is possible that they have also invested assets to the value of $26.4m with the lending bank. An eye-watering amount for us mere mortals but presumably a drop in the ocean for one of the richest couples in the world.