The majority of people get their mortgages from well-known high street banks and building societies. But if there is something unusual about your situation or your property plans it can sometimes be challenging to find a lender to accept you. Could a private mortgage be the answer?
What is a Private Mortgage?
A private mortgage describes a situation where you are working with a private bank or financial organisation to finance a property purchase.
There are many private banks in the UK and worldwide. They are ‘private’ because they are not incorporated as public companies. They often provide more exclusive banking services and restrict their client base to high net worth individuals with complex financial situations.
What are the advantages of Private Mortgages?
The main advantage of a private mortgage is that it can potentially enable you to buy a home when other lenders won’t loan the money to you.
High street lenders generally focus on straightforward property purchases. They can move faster because they have strict lending criteria and a standard approach. If your circumstances don’t fit the norm, however, you may find it difficult to get a loan.
Situations where a private mortgage might prove advantageous include:
- When you have complex income streams
- When a lot of your income is in the form of a bonus
- If you are buying a non-standard property like a Grade I listed building, a thatched property or a converted home.
- Where the property value is over £1 million
- If much of your money is tied up in property or other assets.
Another advantage of a private mortgage is that you may end up with greater flexibility than with a standard mortgage lender. For example, there may be fewer restrictions on overpayment or early repayment. Interest rates are often favourable compared with the high street.
What are the disadvantages of Private Mortgages?
Private bank mortgages are likely to take a while to organise, because the bank may need to design the mortgage around you and your individual circumstances. This could involve exploring different lending solutions.
Many private banks will want to organise more than your mortgage, and they may ask that you transfer other financial investments or products to them as part of the arrangement.
The fees for your bespoke mortgage could also be significantly more, too.
How do I set up a Private Mortgage?
Private mortgages are not easily available to the general public, so the only way to explore your private options is to speak to a specialist Mortgage Broker.
A broker will know the private banks and lenders to approach in line with your specific situation. Just as with a standard mortgage you will need to meet some key requirements, such as:
- Having a cash deposit ready
- No significant outstanding debts
- Proof that you can afford to make the monthly repayments on your mortgage
- You have some form or regular income
Your broker will work on your behalf to design a suitable mortgage deal. Once you are happy with the arrangement, you sign a mortgage contract.
Private Lender Buy to Let Mortgages
Private Buy to Let mortgages are fairly commonplace, particularly for individuals that have a number of rental properties or who have an unpredictable or atypical income. Again, this is something your Mortgage Broker can advise you on.
Choosing a Private Commercial Mortgage
Private banks are actually behind many commercial mortgages, because commercial financing agreements are so complex and need tailoring to suit the exact situation. High street banks or building societies are much less involved in the commercial mortgage market.
Can I get a Private Mortgage with Bad Credit?
There’s no need to assume that if you have bad credit you need to go private for a mortgage. Depending on the precise details of your debt problems and your credit scores, there are a number of non-private specialist lenders that may be able to help.
Private mortgages with bad credit do exist, however. Again it is important to seek mortgage advice to narrow down the most suitable options for you. It may be simpler to enlist the support of a family member to act as a guarantor, for example.
How can a Private Finance Mortgage Broker help me?
If your situation is sufficiently complex to require a private mortgage, you will certainly need professional advice to explore your options.
At Assured we work with clients in a wide range of situations and devise bespoke solutions to achieve their goals. We will explore various options for mortgage loans that suit your specific situation. We are registered in England and fully authorised and regulated by the Financial Conduct Authority.
Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.