High Net Worth Mortgage Brokers
Listen to the podcast about the high net worth mortgages with Jamie Elvin:
With full access to an unrivalled network of private, mainstream and specialist lenders, our award-winning team is perfectly placed to secure you a bespoke mortgage arrangement, tailored to suit your circumstances.
We recognise that obtaining a substantial mortgage for a multi-million pound property can be a challenging and overwhelming process. Regardless of the complexity of your situation, our brokers have successfully and confidentially assisted numerous esteemed high-net-worth (HNW) and ultra-high-net-worth (UHNW) clients, possessing extensive knowledge of the market.
Who is considered as high net worth and what are high net worth mortgages?
The FCA’s definition of a high net worth individual is someone that earns in excess of £300,000 a year, or has more than £3,000,000 in liquid assets. People that have acquired considerable wealth are offered bespoke mortgage products to suit often complex needs. They also benefit from a personalised underwriting process.
What are the challenges securing a mortgage for high net worth clients?
Securing a mortgage for a high net worth client can present certain challenges, including:
Complex Income: High net worth individuals often have complex income structures, such as income from multiple sources, including investments, business ownership, and rental properties. Lenders may require additional documentation and thorough assessment to understand and verify this income.
Foreign Incomes: If a high net worth client earns income from foreign sources, lenders may have stricter requirements for income verification and may consider factors like currency exchange rates and potential volatility in foreign markets.
Cross-Securitised Deposits: High net worth clients may use assets like investment portfolios or other properties as collateral for their mortgage. Lenders may require detailed valuation and legal assessment of these assets, which can add complexity to the mortgage process.
Income from Multiple Sources: When a client’s income is derived from various sources, lenders may need to evaluate each income stream separately and assess its stability and reliability. This can require additional documentation and analysis.
To navigate these challenges, high net worth clients may benefit from working with mortgage brokers experienced in dealing with complex financial situations. These professionals can guide clients through the mortgage process, provide access to specialised lenders, and assist with gathering the necessary documentation to demonstrate affordability and creditworthiness..
How much can I borrow and what deposit is required?
In general, large loans with private banks can be arranged from anything from £500,000 up to £25,000,000. The minimum deposit required is 5% in some cases – but of course that will depend on your circumstances at the time.
Private banks also consider more complex types of income that might not be accepted by standard banks and building societies. Examples are company profits, foreign company income and dividends from stocks and shares.
Because they take a more holistic view of your finances, you may be able to secure a mortgage at a higher loan to income ratio than on a normal mortgage. You could potentially borrow six times your salary, or more.
Who offers high net worth mortgages?
Most high street banks and builders societies just aren’t equipped to deal with high net worth individuals or large loans. They don’t offer the flexibility on their product facilities or underwriting to meet complex requirements. It’s therefore usually specialist lenders or private banks that offer the flexibility to meet the needs of such borrowers.
Asset backed mortgages
An asset-backed mortgage is a type of loan where the borrower’s assets, such as property, investments, or valuable possessions, are used as collateral to secure the loan. If the borrower defaults on the mortgage, the lender can seize and sell the assets to recover their funds. Asset-backed mortgages are typically used by borrowers with valuable assets but may carry higher risks for the borrower as the assets are at stake in case of default.
High value interest only mortgages
It’s possible in some circumstances to arrange high value interest only mortgages for high net worth clients. Interest-only mortgages offer several benefits for high net worth clients:
Cash flow management: Interest-only mortgages allow borrowers to make lower monthly payments by only paying the interest portion of the loan. This frees up cash flow for other investments, business ventures, or personal expenses.
Investment opportunities: High net worth individuals often have access to lucrative investment opportunities. By choosing an interest-only mortgage, they can allocate their funds towards these investments, potentially generating higher returns than the cost of borrowing.
Tax planning: Interest-only mortgages can be used as a tax planning tool for high net worth
individuals. By directing funds that would have gone towards principal repayments into tax-efficient investments, borrowers can optimise their tax strategy and potentially reduce their overall tax liabilities.
Flexibility and liquidity: Interest-only mortgages provide flexibility and liquidity by allowing borrowers to retain capital for other purposes. This can be particularly beneficial for high net worth clients who may have substantial assets or investments that they want to preserve or liquidate strategically.
Estate planning: Interest-only mortgages can be utilised as part of estate planning strategies. Borrowers can structure their mortgage repayments to align with their long-term financial goals, including passing on assets to future generations.
It’s important to note that high-value interest-only mortgages may have specific eligibility criteria, higher minimum deposit requirements, and different lending terms compared to traditional mortgages. Consulting with a mortgage broker who specialises in serving high net worth clients can help navigate the options and secure the most suitable mortgage solution based on individual financial goals and circumstances.
Can they be secured against a number of properties?
Certainly! If you’re a landlord with a substantial property portfolio and you wish to access capital for new purchases, you can explore refinancing options. Some lenders may consider an asset-based mortgage that takes into account your entire portfolio as collateral. However, the approval will depend on the lender’s affordability assessment and the strength of the assets as security for the proposed lending.
Which lenders offer high net worth mortgages?
While many banks offer mortgages to high net worth clients, their product offerings may
not always be suitable or tailored to their specific needs. Private banks such as Barclays Private, HSBC Global, and Lloyds Private are examples of financial institutions that specialise in serving high net worth individuals and offer dedicated mortgage solutions designed for their unique requirements.
Private banks often provide personalised services, customised mortgage options, and a
deeper understanding of the complex financial situations of high net worth clients. They may offer features such as larger loan amounts, flexible repayment terms, tailored interest rates, and access to exclusive benefits or services.
By working with private banks that specialise in high net worth mortgages, clients can benefit from a more comprehensive and tailored approach to their mortgage financing, ensuring that their specific needs, goals, and financial circumstances are taken into account. Consulting with a mortgage broker or financial advisor experienced in working with high net worth individuals can provide valuable guidance and help navigate the options available from these private banks.
Can you get a million pound Buy to Let mortgage?
Yes, you can. It probably won’t come as a shock to you that £1 million doesn’t get you that much in London these days – so there are plenty of properties over a million pounds that are regularly mortgaged on Buy to Let.
You’ll find most banks and building societies will lend based on the potential rental income of the property. But in many instances that isn’t sufficient – especially where the property is of particularly high value.
Some providers therefore adopt a more holistic approach and they’ll consider other sources of income to supplement a shortfall between the rent and the mortgage. That process is called Top Slicing and it’s quite common on higher value Buy to Let mortgages.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages.
Speak To an Expert
Whether you’ve just had an offer accepted on a property and you’re ready to go, or you’re simply wondering how much you need to save for a deposit, it’s never too soon to reach out.
How can a mortgage broker like Strive Mortgages help a high net worth client?
If you’re a high net worth client l, there’s a good chance that your finances aren’t going to be straightforward. Having a good broker like us, with experience in liaising with private banks on your behalf can prove invaluable and will give you the best chance of success when you’re applying for a mortgage.
A mortgage broker can provide valuable assistance with a high net worth mortgage in several ways:
Expertise in complex financial situations: High net worth individuals often have intricate financial situations, including multiple income sources, investment portfolios, and complex asset structures. A mortgage broker specialising in high net worth clients understands these complexities and can navigate through them to find suitable mortgage options.
Access to specialised lenders: Mortgage brokers have access to a wide range of lenders, including those that specialise in serving high net worth individuals. These lenders offer tailored mortgage products with features and terms that cater to the unique needs of affluent borrowers.
Customised mortgage solutions: A mortgage broker can analyse the borrower’s financial profile and objectives to recommend customised mortgage solutions. This may include structuring the mortgage to optimise tax efficiency, maximising borrowing capacity, or incorporating features like interest offsetting or flexible repayment options.
Negotiation and competitive rates: Mortgage brokers can negotiate with lenders on behalf of high net worth clients to secure the most favourable interest rates and terms. They have in-depth market knowledge and relationships with lenders, enabling them to obtain competitive rates and favourable mortgage terms.
Time-saving and convenience: Engaging a mortgage broker saves time and effort for high net worth individuals who often have demanding schedules. The broker handles the mortgage search, paperwork, and communication with lenders, streamlining the process and allowing the borrower to focus on other important matters.
Your home may be repossessed if you do not keep up with your mortgage repayments.