High net worth mortgages are specialised home loans designed for individuals with substantial wealth. These mortgages cater to borrowers with significant assets, offering flexible terms, larger loan amounts, and personalised lending solutions tailored to their unique financial circumstances.
Certain lenders specialise in servicing high-net-worth clients, and their mortgage needs. They differ from traditional lenders as they may use non-conventional assessment methods to agree on a mortgage. This can involve securing a mortgage against assets, other than a house.
High street providers can provide loans of up to £5 million. After £5 million, private Banks are used. A private bank can help to keep costs down by using other assets they may also have under management. If you have an investment portfolio with a private bank, it may be possible to use these funds as collateral to support your application.
High Net worth mortgages tend to be individually negotiated. Interest rates will vary, based on the strength of your application and your circumstances.
Mortgages can be complex for high-net-worth individuals as income can be irregular. A high-net-worth individual's income can come from sources such as dividends, shares dividends, share bonuses, and company accounts. Specialist lenders who work with high-net-worth mortgage advisers can accept this sort of irregularity.
This would not be limited to private banks as often specialist lenders and challenger banks can assist.
High net-worth Mortgages are available for borrowers with an income of over £300,000 annually, or assets valued at £3 million or higher. This limit is defined by the FCA.
It is not always the case that high-net-worth individuals are required to follow the same lending restrictions that may be implied upon a regular mortgage applicant. When a Mortgage begins to exceed a value of £500,000, it is generally assessed by a large loans team at the bank as there can be different criteria that need to be followed during the underwriting process.
For High-net-worth mortgages, interest only is more frequently used than standard mortgages.
The Financial Conduct Authority in the UK has a high net worth exemption, which allows for greater flexibility for Mortgage applications.
High-profile careers can be demanding and can take you to many different locations throughout. If you are a high-net-worth eligible individual, you may want to settle in a new country and have a need to buy an international property, with an international Mortgage.
An International Mortgage is a loan secured against a property in a country other than where you live.
If you are looking for advice on International Mortgages, high-net-worth Mortgage advisers work with specialist international Mortgage lenders, who are able to look at non-conventional ways for assessing high-net-worth Mortgages.
This service can be suited for individuals who do not live in the UK, or individuals who do live in the UK but have property abroad.
Specialty lending for high-net-worth individuals is not limited to Mortgages. There are often complex borrowing needs that can be financed via other methods that do not always involve a property.
Securities Backed Lending Involves arranging loans using financial securities as collateral. Assets that can be used include Equities, Bonds, and Investment portfolios. This opens a line of credit that can be accessed when needed, during a pre-set period. Securities-backed lending is quick to underwrite, offers flexibility, and can be available for a wide range of uses. Interest rates will depend on the type and value of assets being used as collateral. As with other High-Net-Worth lending options, the terms of the loan will be individually negotiated. Securities-backed lending is very competitive and borrowing can be as little as 1% per annum if you are using A-grade rated assets.
Single stock loans are considered higher risk than when a diversified portfolio is being used as collateral. These options are still available though. Single-stock loans provide flexibility to those who have built wealth connected to an individual stock. Due to the risk attached to single stock securities, the interest rate you will be offered will factor this in.
Pre-IPO loans are for anyone who has announced their intention to take their business public but has not yet done so. The lender will form their own valuation of the business and use this in their calculations to determine the costs of the loan.
As high-net-worth Mortgages are individually negotiated, trying to navigate this market without support can be difficult. If you choose to try the application alone, it could possibly result in you missing out on the venture or property you were looking to raise money for. It could also result in costs due to a failed application.
High-Net-Worth Mortgage advisers are specialists in this respect, not only will they help you find the best lender for your needs but will help you negotiate the terms of the loan and present the application. They will follow up where needed, manage the relevant stakeholders such as conveyancers, and keep you as up-to-date as you can be.
Deposits are typically higher for high-net worth Mortgages. For Mortgages around £2Million deposits are around 25%. As you borrow more, you will need to raise a higher deposit, £5M-6M Mortgages can be 40% deposit.
With a high net worth mortgage, you can use your assets in addition to the security of the property you are purchasing. This can include physical assets such as Stocks, shares, property, or intangible Assets such as intellectual property.
A Mortgage Adviser who specialises in high-net-worth mortgages will be able to help you find the best Mortgage product to suit your needs. They can also negotiate with lenders on your behalf.