High Net Worth
High Net Worth Mortgages – exploring your options
As a High Net Worth individual it can be surprisingly challenging to find a mortgage deal that suits you. The key is to seek out a few options and compare the details – which is where a Mortgage Broker can save you time and money.
What is High Net Worth?
A High Net Worth individual is somebody that has an annual income or net assets worth £500,000 to £25 million. It’s a term originating in the finance industry to describe wealthy people who often have complex income sources and intricate financial situations.
Why can it be difficult to get a High Net Worth Mortgage?
Many High Net Worth people find that they are unable to get a standard mortgage from a high street lender. It’s often because they have irregular income or sometimes no formal income like an annual salary.
The main mortgage companies often set strict criteria around their mortgages, and consistent, reliable income is a key requirement. The situation is complicated further if you require a high loan amount. Many lenders will only loan up to £1 million for a property.
What is the Loan to Value on a High Net-Worth Mortgage?
The Loan to Value (LTV) is the size of a mortgage against the property’s value, shown as a percentage. Lenders offer Loan to Value of anything up to 95% of the property cost. You unlock the lowest interest rates if you can put down a cash deposit of 25% of the house price. For a high end, valuable property this can be a considerable amount of money.
A deposit of that size can be a challenge for many High Net Worth individuals, especially if your funds are tied up in assets rather than as cash. However, by looking for specialist lenders and private banks you may find a competitive mortgage rate with as little as 10% deposit.
These lenders are often more accommodating of wealthy people who have complex income streams, and can accept your assets as a basis for borrowing.
How will my income/wealth be assessed?
With standard mortgage applications, lenders calculate your maximum loan amount based on your annual income. Typically, they will loan around 4-5 times an applicant’s salary.
But High Net Worth individuals often don’t receive a standard annual income from a salary. As a result, many typical mortgage solutions are not available to you.
Instead you will need to seek out specialist lenders and private financial providers that can take your assets into account in their affordability assessments.
Special lending options for High Net Worth clients
When you choose a specialist lender to help you buy a home, there are a couple of special financial options they might offer:
AUM (assets under management) – Here the lender will take over the management of your investments – such as stocks and shares portfolios – and use them as security against the loan. This is a popular way for High Net Worth clients to get a higher LTV or a total loan amount.
Dry Lending – with this option the mortgage debt is secured against the property you are buying, similar to a standard mortgage. If you fall behind with the repayments on your mortgage, the home may be repossessed.
Large mortgage loan payments
Buying an expensive property means high monthly repayments. A specialist mortgage broker like Assured FG will work with you to structure the mortgage payments to suit your circumstances and preferences. You might choose to pay annually rather than monthly, for example. Or you might need a flexible mortgage arrangement where you can contribute large lump sums to reduce the debt more quickly.
We will explore all the options with you and work with the lender to design a tailored solution that works for you.
How can Assured FG help?
We work with many High Net Worth individuals to find ways to finance residential and commercial property purchases. We will manage every aspect of your property financing, in line with your specific financial situation. Our relationships with specialist lenders and private banks help us design bespoke mortgage deals on your behalf. By narrowing down the options we help you make an informed choice and achieve your goals.
Here at Assured FG, we are registered in England and authorised and regulated by the Financial Conduct Authority (FCA). To discuss your property goals and specific circumstances, just get in touch. We work with clients both remotely and via face to face consultations, so just let us know what works best for you.
Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.