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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 19th April 2021*

If you are considering a high net worth mortgage (HNWM) , you may have found that some high street lenders don’t always offer the most competitive rates.

If this has been the case for you, the good news is that we work with specialist, whole-of-market  advisors who arrange the best deals for high net worth residential and investment mortgages all the time.

To provide you with a clear insight into high net worth mortgages, we have gathered the key information you’ll need to know in our guide below, including:

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What is high net worth mortgage?

Most lenders will define a high net worth mortgage customer as an individual with an annual net income or assets worth £300,000 or more.

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

Why would a buyer get a HNM?

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 financially inefficient.

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

Are there low income high net worth mortgages?

High Net Worth Mortgages are usually offered to those that earn an above-average income, for either a large mortgage or a remortgage, so if you have a low income, the number of lenders who are willing to lend to you will be restricted for a low income mortgage.

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.

Some lenders use income multiples to calculate affordability. 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.

Is asset finance a viable alternative to asset mortgage solutions for HNWIs?

Asset finance is a rather different animal to mortgages and not one that is typically used for purchasing residential property. Asset finance is normally utilised for commercial purposes by businesses looking to purchase the equipment they need to grow. Leasing and hire purchase agreements are both common examples of asset finance.

In asset finance, assets are usually grouped into either hard or soft categories. Hard assets would normally be held as security against any asset finance agreement.

Examples of hard assets would be:

  • Commercial property
  • Vehicles
  • Equipment (machinery / engineering)
  • Agricultural equipment

Soft assets differ from hard assets as they’re seen as having little or no re-sale value whereas all of the examples above would retain some value for the business or lender to sell on.

Examples of soft assets would be:

  • Office furniture
  • CCTV
  • Medical equipment
  • Scaffolding

The terms for asset finance agreements usually only stretch as far as 5-7 years, therefore unless it was for a commercial property it’s hard to see how asset finance could be a viable alternative to an asset-integrated mortgage.

Can I secure an asset-based mortgage across a number of properties for large portfolios?

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.

Can I refinance an asset-based mortgage?

Yes, you could always talk to your current lender about the possibility of refinancing. If you’re hoping to remortgage onto a deal with another lender, this is also possible and the advisors we work with can help you find the best product for your needs.

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.

Can a HNWI get an asset-backed mortgage with a poor credit rating?

A bad credit rating can cause problems even for a HNWI. 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 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.

High net worth mortgage rates

When searching for the desirable rates, some property investors or house buyers can make the mistake of only considering their current lender or bank.

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 are whole of market and may have access to deals not available to the public.

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.

High net worth mortgages FAQ

Here, you will find the answers to some of the most frequently asked questions we hear about high net worth mortgage lending.

Are there any restrictions or 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.

Why you should speak to a high net worth mortgage broker

Searching an ever-changing market can be time-consuming and with investments, speed is often of the essence. The high net worth mortgage brokers we work with are efficient and manage any research, negotiations or paperwork on your behalf, saving you yet more time and hassle.

They also make it their priority to keep ahead of any changes that may affect the terms of your mortgage. With access to hundreds of high net worth mortgage lenders across the UK, including London, they are in a prime position to find you the best mortgage.

The advisors we work with are selected carefully. When one is appointed to you, you can be sure that they are…

  • Whole of market with access to specialist high net worth lenders
  • OMA Accredited
  • LIBF Training course qualified
  • Qualified to provide bespoke advice to high net worth borrowers

Speak to a high net worth mortgages expert

If you have questions about high net worth mortgages and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 19th April 2021
OnlineMortgageAdvisor 2021 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of 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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