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High Net Worth Mortgages

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 8, 2022

Not all mortgage lenders fully understand the needs of high net worth customers, but the good news is that there are mortgage brokers who specialise in these deals, and they can help you land the kind of bespoke deal you won’t find on the high street.

To help you get the advice you need, we’ve put together this guide to high net worth mortgages, and here, you’ll learn how to qualify for one, what rates to expect and how to find the right lender.

What is high net worth mortgage?

A high net worth mortgage is a type of mortgage for individuals who have an annual net income of £300,000 or assets worth £3 million or more. People who meet this criteria aren’t always bound by the same lending regulations as other customers as mortgage lenders who specialise in high net worth agreements are often willing to offer much high loan amounts, income multiples and bespoke terms and conditions.

Often required for high-value properties or investments to build a property portfolio, high net worth mortgages can be larger and often more complex than standard residential home loans.

Many customers who qualify for these mortgages wish to protect their assets and so lending through offshore structures, special purpose vehicles, trusts, and foundations may be required. For some mortgage lenders, this can complicate things which is why many stick to mainstream mortgages that can be quicker to process.

How to get a high net worth mortgage

Here are the steps to follow to get your application off on the right track…

  1. Prepare your documents in advance: You will need to provide all of the usual mortgage paperwork for a high net worth mortgage agreement, including proof of ID, address and income. Be sure to have the paperwork for any assets you intend to declare, either as income or security for the loan. You can find a full list of the documents you’ll need in our guide to mortgage applications.
  2. Find the right mortgage broker: This is the key to landing a bespoke deal for a high net worth mortgages. Many of the lenders who offer these agreements only work through brokers, plus the right broker can also help you save time and money by negotiating a bespoke deal on your behalf. Make an enquiry and we’ll match you with a high net worth mortgage advisor today.
  3. Let your broker do the rest: There are other steps in the mortgage process, but the beauty of using a broker is that they will handle them for you. You won’t have to lift a finger while they guide you through your application and make sure everything goes smoothly through to completion.

Why get a high net worth mortgage?

Many investors take out high net worth mortgages when financially, they may be in a position to purchase outright. However, by doing so, this would limit their liquidity for other possible investment opportunities. Additionally, tying up a large sum of money in one asset can be financially inefficient.

For many buyers, asset protection is also crucial. The advisors we work with have a wealth of experience with this and can discuss the options that are best suited to your situation.

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Can you get one on low income?

Yes, under the right circumstances. High net worth mortgages are usually offered to those that earn an above-average income, but if you are asset rich, there are lenders who might still offer you high net worth mortgage exemption and secure the debt against your assets, assuming you have enough wealth tied up in them.

Every lender has their own affordability checks but in most cases, income will play a big factor when they conclude how much and if they are willing to lend to you. Most will cap lending at 4.5 x your annual income, whilst some will cap at 5, and a handful will even lend up to 6 x your income in the right circumstances.

However, high net worth mortgage borrowers can be assessed differently to mainstream customers as some lenders take the value of assets into consideration when judging affordability. This means you could get a mortgage based on more than 7 x your income, as well as bespoke terms and conditions.

Asset-backed mortgages

Many high net worth individuals choose an asset-backed mortgage over a traditional home loan, especially if they are asset rich but their actual income is more limited. With an asset-backed mortgage, the debt is secured against high-value assets, such as a stocks and shares portfolio, rather than the property itself.

One of the main benefits of an asset-backed mortgage is that borrowers can buy property without having to liquidate their assets. If your assets are valuable enough to meet the high net worth criteria, it may be possible to take out a much bigger mortgage than what you’d qualify for from a traditional high street lender, and the rates are usually more favourable compared to other mortgage types.

Many of the lenders who offer bespoke asset-backed mortgage deals for high net worth borrowers are only approachable through mortgage brokers, but the good news is that we work with mortgage advisors who specialise in this area of lending, and they can make sure you’re introduced to the right mortgage provider.

Can they be secured across a number of properties?

Yes, absolutely. If you’re a landlord with a large portfolio looking to release capital in order to fund new purchases your portfolio as a whole can be used for refinancing purposes. One asset-based mortgage can be considered for the whole portfolio.

This, again, will come down to the specific lender’s affordability assessment and the strength of the assets involved as security against any proposed lending.

Refinancing an asset-based mortgage

You could always talk to your current lender about the possibility of refinancing an existing asset-backed mortgage. If you’re hoping to remortgage onto a deal with another mortgage lender, this is also possible and the advisors we work with can help you find the best deal for your needs and circumstances.

Keep in mind that there may be additional charges to foot as your existing mortgage provider will hold a charge on the assets you’ve secured the loan against.

What if you have bad credit?

bad credit rating can cause problems even for a high net worth individual who’s in the market for an asset-backed mortgage. There’s lots of wealthy people who have declared themselves bankrupt due, for example, to poor performing businesses.

The good news is, regardless of your financial position, there are high net worth mortgage lenders who will look at applications from borrowers who have had credit issues in the past and a few who specialise in these types of mortgage applications.

What rates to expect

When searching for the desirable rates, some property investors or house buyers can make the mistake of only considering their current lender or bank. In reality, there might be a better rate out there is you’re a high net worth individual as lenders are known to offer bespoke deals for people in this category.

Often banks and building societies do offer ‘exclusive rates’ for current customers, however on closer inspection and when comparing these rates to others on the market, in some cases a better one can be found, and this is where the expert advisors we work with come in. They specialise in high net worth agreements and have access to deals that aren’t available to the public. They can also negotiate rates and terms from the ground up, if you meet the high net worth criteria.

As well as this, the property market can change quickly. Interest rates fluctuate and the criteria needed to meet affordability checks can differ extensively between lenders.

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Get matched with a high net worth mortgage broker

High net worth mortgages can be tricky to obtain without the right advice, but the good news is that we work with brokers who specialise in arranging them. They have access to private lenders who offer deals for high net worth individuals, including higher loan amounts, bigger income multiples and bespoke terms and conditions.

By using our free broker-matching service, you can get yourself paired with the mortgage advisor who is best placed to help you get the best high net worth mortgage deal possible.

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

FAQs

Are there any additional requirements to prove ‘source of wealth’ for larger deposits?

As you would expect, the larger the property value (and borrowing) the higher the deposit requirements. Also, as previously mentioned above, larger borrowing requests are usually caveated with a more stringent loan to value criteria.

So, for example, an asset-backed mortgage may be approved on a property worth £4,000,000 with a 50% loan to value restriction, therefore, requiring a £2,000,000 deposit. A lender would not expect such a large amount to be derived from disposable income. A HNWI may draw upon these funds from a variety of sources:

  • Sale of a UK property
  • Sale of a property overseas
  • Cash funds from investment portfolio
  • Inherited or trust monies
  • Family gift
  • Funds from sale of a business

Whichever the source a lender would require documentary proof of where these funds came from in order to satisfy its internal and regulatory money laundering requirements.

Can I get a high net worth buy-to-let mortgage?

Yes, this may be possible. The approach lenders tend to take towards buy to let properties can generally be more relaxed towards criteria such as an individual’s income stream as the focus really is on the assets available for security and the income generated from the rent can be used for the mortgage payments. This can also reduce the overall tax liability from the rental income.

Most lenders will want to see evidence of some sort of regular income however there are some who will accept no minimum income on a buy to let purchase. Another benefit of having a large property portfolio, as mentioned above, you could use this portfolio to raise finance for a residential property purchase for use as your main residence.

Can I get a high net worth mortgage on a second home?

Again, it’s certainly possible if you meet a high net worth lender’s criteria for second home mortgages.

Owning additional homes purely for your own use is quite common for high net worth individuals whether that’s within the UK or, perhaps, a holiday home overseas.

Borrowing to purchase a second home, unlike buy to let properties, would usually require evidence of income sufficient to cover any mortgage payments as there would be no rental income derived from the property.

If the property is overseas it is worthwhile liaising with a local broker or lender, or at least a lender/broker who handles UK mortgage applications based on foreign income. They will have a firmer understanding on the local laws and regulations surrounding a property purchase, as these will differ from one country to the next.

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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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