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Asset-Based Mortgages

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: February 14, 2022

Asset-based mortgage lending is a bespoke type of finance for high net worth borrowers who want to secure a mortgage against their liquid assets, but it isn’t easy to come by in the UK.

If you’re in the market for an asset-based mortgage or simply want to know more about them, you’ve come to the right place. In this guide, you’ll learn how they work, what kind of assets you can secure a mortgage against, and how to find a broker who specialises in this form of lending.

Read on to find out more or jump straight to a topic using the menu below…

What is an asset-based mortgage loan and how do they work?

An asset-based mortgage is a bespoke form of borrowing for high net worth individuals. It involves securing a mortgage debt against a valuable asset, rather than the property itself.

Also known as asset-backed or securities-backed mortgages, this type of finance belongs to a category of high-value lending called Lombard Loans, which are credit agreements where a fixed loan or overdraft is granted and secured against the borrower’s liquid assets.

While there are mainstream lenders who offer these mortgages in other territories, they can be more difficult to come by in the UK and are usually only available through specialist brokers.

What kind of assets can you secure your mortgage against?

Asset-based mortgages are usually secured against liquid assets, most commonly high value stocks and shares portfolios. It’s also possible to secure the mortgage against the following…

  • Cash
  • Gold
  • Luxury yachts
  • Luxury sports cars
  • Private planes
  • Art collections
  • Other assets (provided they are valuable enough)

Since asset-backed mortgage lending is bespoke, lenders assess applications on a case-by-case basis. This means that virtually any asset of the required value can be at least considered as security, and the deal you will end up with will depend on the level of risk.

Cash and gold are considered the lowest risk, but the potential returns are also less than they would be for an asset such as a strong stocks and shares portfolio.

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Why high net worth individuals choose these mortgages

The main benefits of a securities-backed mortgage are as follows…

  • You can buy property without having to liquidate all or some of your assets
  • You can get a mortgage if you’re cash poor but asset rich
  • You could potentially get a larger mortgage
  • The rates are typically lower than for regular high net worth mortgages

How to start your application

Here are the steps to follow to get an asset-backed mortgage…

  1. Get your paperwork together:
    There are specific documents you’ll need for this type of mortgage. Firstly, you’ll need to provide proof of your high net worth status, and secondly you’ll need to complete an asset and liabilities statement to disclose full details for the asset you’re hoping to secure your mortgage against. You’ll also need the standard mortgage application documents, which you can find a full list of in this guide.
  2. Speak to a high net worth mortgage broker:
    Your best chance of securing an asset-backed mortgage is through a high net worth mortgage broker. The lenders who offer these agreements in the UK are usually only approachable through a broker, so you’ll need to find one who specialises in providing asset mortgage solutions.
    The good news is that you don’t need to lift a finger to find one. We work with brokers who help high net worth individuals borrow based on their assets every day, and would be more than happy to match you with the advisor who’s best placed to assist you.
  3. Let your broker take it from here:
    The broker we match you with will be a fully-vetted expert in asset-based mortgages, and their knowledge, experience and lender contacts will put you on easy street from here. They will track down the best mortgage lender for you and negotiate a bespoke deal with them on your behalf, boosting your chances of landing a favourable interest rate. What’s more, your broker will be on hand to offer tailored advice from start to finish and guide you through the application process.

Make an enquiry with us online and we’ll set up a free, no-obligation chat between you and a high net worth mortgage specialist today.

Eligibility criteria and deposit requirements

As these mortgages are always assessed on a case-by-case basis, the lenders who offer them don’t have a criteria that is set in stone.

Mortgage agreements are always bespoke, but there are some requirements that tend to apply across the board, and they are as follows…

  • You must be a high net worth individual: To meet this criteria, you’ll need to have an annual net income of £300,000 or assets worth £3 million or more.
  • Minimum asset value: Most private mortgage lenders will only enter a deal that’s worth at least £1 million. Beyond this, the lender will need to be confident that the value of the asset will be high enough to recoup their losses if you were to default on the agreement.
  • Minimum deposit amount: You’ll need a deposit of at least 5-10%, but only if your asset is low risk, such as cash or gold. For a stocks and shares portfolio, deposit requirements are usually around 25%, as they can be more volatile.
  • Credit history: Credit history requirements are not predetermined for asset-backed mortgages, but if the lender finds bad credit on your file, they will likely assess the circumstances behind it. For high net worth individuals, lenders are far more flexible with what they can and can’t accept, though severe adverse might affect the deal you get.

What kind of interest rate to expect

Asset-based mortgage rates are always bespoke and will be set based on the overall risk the lender is taking on by allowing you to secure a mortgage against your assets. The rates are typically lower than they are for standard high net worth mortgages and can start at around 1%.

The lowest interest rates are usually reserved for very liquid assets, like cash or gold, and can climb to anywhere between 2% and 4% for other assets.

Lenders who offer these mortgages are always open to negotiation where rates are concerned, but you’ll likely need a specialist broker to head up the negotiations on your behalf.

Which lenders offer these mortgages?

In the UK, asset-based mortgages are offered exclusively by private lenders. Most of these mortgage providers don’t deal with the public and are only approachable through a broker.

Private mortgage lenders are well placed to meet the needs of high net worth individuals and they can operate outside of usual lending regulations if you meet this criteria. This means they can approve much higher loan amounts and offer bespoke rates and deals.

Even if you get wind of a private lender who offers asset-backed mortgages, approaching them directly is not recommended. On the off chance that they’re willing to speak to you, you might not get the best deal if you limit yourself to just one mortgage provider.

One of the main benefits of applying through a specialist high net worth mortgage broker is that they have deep working relationships with a wide range of private lenders, and can compare the rates they’d be willing to offer you for this type of mortgage to make sure you get the best deal.

Refinancing an asset-based mortgage

Most asset-based mortgages are offered on an initial one-year deal which can be renewed every 12 months, but it’s possible to refinance your agreement at any time.

There are many reasons to refinance. To give a popular example, the value of the asset you’ve secured your mortgage may have risen and you want to borrow against its increased value.

Some borrowers also decide that they want to switch to a standard high net worth mortgage based on a multiple of their income, and this is possible with your current lender or a new one, as long as you qualify for a regular high net worth mortgage with the provider you choose.

To refinance and get the best deal, you’ll need the help of a specialist mortgage broker as they will be able to negotiate a bespoke remortgage agreement for you.

Getting a mortgage based on combined assets and income

If you meet the high net worth criteria and your wealth comes from income and assets, there’s a middle ground to consider: applying for a mortgage based on combined salary and assets.

You might consider doing this if the idea of securing the entire mortgage debt against your assets concerns you, or you’re unable to get the mortgage you want on your income alone.

Some lenders will allow you to declare a percentage of your assets on top of your income for the affordability checks. This would allow you to take out a standard high net worth mortgage based on a multiple of the combined amount, without putting the asset’s total value on the line.

It may also be possible to refinance an asset-backed mortgage onto an agreement based on combined income and assets, if you decide this is a better fit for you.

Get matched with an asset-based mortgage expert today

Applying through a specialist mortgage broker is usually mandatory if you need an asset-based mortgage, as most of the lenders who offer them only offer finance through brokers. But the good news is that, with our help, you won’t have to lift a finger to find one.

We offer a free broker matching service that will quickly assess your needs, circumstances and assets to pair you with a high net worth mortgage broker who specialises in asset-backed mortgages. They will have the exact expertise you need to land a great bespoke deal.

Call us on 0808 189 2301 or make an enquiry and we’ll set up a free, no-obligation chat between you and your ideal mortgage broker today.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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