A $37.5M home, then an estate

He wanted the home paid for with room to spare, and nothing for himself afterwards. The rest was to build for his heirs.

Into the instrument: $12,500,000$4,166,667 a year for three years
Years 16 to 30: $3,765,000a year, projected: 120% of the mortgage payment
For his estate at 88: $85,551,787projected

What he wanted

The home, with its payment covered more conservatively than the standard design, and no income for himself afterwards. He wanted the benefit left to build for his estate. He was 50 when the design was prepared.

How it was structured

The design is sized to a $30,000,000 mortgage. On the program’s standard terms that is a $37,500,000 home with $7,500,000 down. He pays interest only for fifteen years: $162,500.00 a month at an assumed 6.5%.

He contributes $12,500,000 to a structured financial product over three years, $4,166,667 a year. That is a third of the price, more than the standard 30%. A bank finances the rest of its funding and is repaid from the instrument in year 15.

What the design shows

From year 16, when he is 65, the instrument is projected to pay $3,765,000 a year for fifteen years. The mortgage payment is $3,135,987 a year, so the payout is sized at 120% of it and $629,013 a year is left over.

After year 30 the mortgage is repaid and he takes nothing further. The benefit keeps building: $85,551,787 for his estate at 88 in the design, and more each year after.

How it was tested

The design was run with no growth credited to the instrument in its first two years. It shows no further collateral called in either year.

The numbers

The design

Client design, projected

Home price: $37,500,000
Down payment, 20%: $7,500,000
Mortgage: $30,000,000
Into the financial instrument: $12,500,000$4,166,667 a year, years 1 to 3
Bank financing repaid: Year 15$64,333,223, from the instrument
His payment, years 1 to 15: $162,500.00 a monthInterest only
Projected payout, years 16 to 30: $3,765,000 a year120% of the mortgage payment of $3,135,987 a year
Paid out by year 30, projected: $56,475,000
For his estate at 88, projected: $85,551,787
With no crediting in years 1 and 2: No further collateral called

From a design prepared for a client, who is not named. The home price and down payment are the program’s standard terms applied to the design’s mortgage. Every payout and benefit is the design’s projection and is not guaranteed. Mortgage payments are calculated at an assumed 6.5%, which is not a rate offer.

Try it with your numbers

Find out if it is open to you.

Three ranges tell you where you stand against the published criteria. If you meet them, Kent Chesley will speak with you personally.

Prefer to talk? Call him directly at 949-293-8686.