High Net-Worth Mortgages

The UK currently has around 2.5 million HNWIs, and if you’re one of them, you’re probably looking for ways to invest in property.

The UK property market may seem a good investment, but not all lenders can suitably cater to HNWIs.

Thankfully, there are lenders who specialise in bespoke deals for high-net-worth individuals and offer solutions and products you won’t easily access on the market.

Today, we will discuss the topic of High Net-Worth Mortgages in detail. So, let’s dive right in, shall we?

What Are High Net-Worth Mortgages?

To understand a high-net-worth mortgage, you must understand who is classified as a High Net Worth Individual (HNWI) in the UK.

In general, individuals with assets worth three million pounds or more or those who earn around £300,000 per year are classified as HNWIs.

High-net-worth mortgages are special mortgages that cater to these individuals. Naturally, people in this bracket aren’t confined by the usual mortgage rules that we must follow in many instances. 

They usually offer much higher loan amounts, bespoke deals, and better rates.

Typically required to build a property portfolio, such mortgages are larger and more complex than traditional ones. 

Customers who qualify for these types of mortgages might use instruments such as lending through offshore entities, trusts, and foundations. This is done to protect their assets.

Reasons For HNWIs To Take Out A Mortgage

Now, the question naturally arises: why would an individual with such a high income need a loan to pay for the property in the first place? Can’t they just buy the property outright?

The truth is, they probably can, but investing their money in the property directly might leave them with less liquidity for other investments. Further, tying up a large amount of money in property can be considered inefficient financing.

What’s more, for most buyers in the HNWI bracket, asset protection is an important factor. As a result, they often opt for high-net-worth mortgages for large property purchases.

High Net Worth Mortgage Terms

As mentioned, high-net-worth mortgages have terms and conditions that differ from traditional mortgages in many cases. The minimum and maximum loan amounts can be very high, depending on the situation.

Usually, a loan of around £500,000 or more is the threshold for this kind of mortgage, while there are rarely any upper limits for the right customer. Further, interest rates and fees can also vary based on the lender and the borrower on a case-to-case basis.

Flexible repayments are another aspect of this type of mortgage, and these might include:

• Both capital and interest repayment
• Interest only repayment
• Extended terms 
• Flexible rates

HNWIs are given the facility to tailor their repayment plan according to their financial needs and cash flows with certain lenders. 

For example, some lenders might agree to lend you 50% of the total amount at a fixed rate and 50% at a variable rate.

Moreover, you can leverage your other assets as collateral for this kind of loan, increasing your borrowing capacity. However, the paperwork will be considerable, so be ready for that.

Here at LendingLine, our experts can sit with you and figure out the best possible terms for your unique needs. We offer tailored HNWI mortgage options that you won’t find anywhere else.

Advantages of Using An Experienced Broker

As you might have understood by now, lenders who offer this kind of mortgage typically don’t deal with applicants directly.

So, it’s best to speak with an experienced broker with a prior history of dealing with such mortgages. They can help you connect with these lenders and get the required mortgage.

Working with an experienced broker will also give you the following advantages:

1. Expert Negotiation With Lenders

Since high-net-worth mortgages are offered in a bespoke manner, there’s a lot of scope for negotiation potentially. An expert broker can help you get the best deal, and they’ll also increase your chances of getting the loan approved.

2. Tailored Advice

Experienced brokers can give you bespoke advice depending on your situation and help you decide the best mortgage type for your needs. They’ll also be able to provide tips and tricks that can help you get the most value out of the mortgage product recommended. 

3. Borrowing Flexibility 

When you’re working with an experienced broker, they can help by taking into account your complex financial situation. For instance, if you’re an HNWI with many assets but little cash, the broker can help get the mortgage approved against certain assets such as existing properties for example.

4. Greater Number Of Options

What’s more, an experienced broker will be able to get you more options from more lenders than you might be able to get on your own. These brokers can compare multiple options, from private lenders to banks and more, and help you get the best deal possible. 

Brokers can also help prepare the documentation, provide invaluable guidance, and help you navigate the complex world of high-net-worth mortgages in general. At Lendingline, we can offer all these services and more.

Cost Of Hiring A High Net Worth Mortgage Broker

Since high-net-worth mortgages have a bespoke nature, it’s only natural that the fees charged by these brokers also vary on a case-by-case basis, depending on the complexity of the application. 

Usually, a broker charges 0.5%-1% of the amount being borrowed or a set broker fee will be agreed. Some brokers may also ask for an upfront administration fee before negotiating with lenders.

High Net Worth Mortgages On Bad Credit

Even if you’re a HNWI, having a poor credit rating can hamper your chances of getting a mortgage, especially if you’re in the market for an asset-backed mortgage not offered by traditional mainstream lenders. 

However, with an experienced broker by your side, you should be able to get the amount you require. But it might mean higher interest rates and greater deposit amounts, if applicable.

Frequently Asked Questions (FAQS)

1. Is It Possible To Get A High Net Worth Mortgage On A Second Home?

Yes, it is possible, provided you meet the lender’s criteria. Owning a second home and taking out a mortgage for it is very common for HNWIs. This can be in the UK or an overseas property.

2. Do You Need To Be A UK Resident To Get This Type Of Mortgage?

Not necessarily. Of course, being a UK resident can make things easier for you. But even if you’re a non-UK resident, an expat or a resident earning in foreign currency, as long as you meet the lender’s conditions, you can get the mortgage.

3. What Are The Various Types Of High Net Worth Mortgages?

The following are the different types of high-net-worth mortgages available:

• Complex income mortgages
• Securities backed lending
• High-value interest-only mortgages
• Dry lending (more traditional mortgages)

4. What Are The Different Property Types That Can be Financed Using A High Net Worth Mortgage?

Depending on the lender’s rules and criteria, this type of mortgage can finance many types of properties, such as luxury homes, investment properties, high-value properties, buy-to-let properties, and even international properties.

5. What Is The Typical Deposit Amount Needed For A High Net Worth Mortgage?

For high-net-worth mortgages, deposits typically start from 10% to 25% of the property’s value. However, you might be able to get better rates with an experienced broker who can work with different lenders on your behalf.

Your home may be repossessed if you do not keep up repayments on your mortgage.

All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.