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A Guide to Private Mortgages

Looking for information about private mortgages in the UK? Get the right advice on them here.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: May 27, 2022

Private mortgages are bespoke mortgage agreements usually aimed at borrowers who qualify for high net worth exemption. The lenders who offer them can be far more flexible than mainstream mortgage providers and aren’t bound by the usual lending regulations.

In this guide to private mortgage lending, you’ll learn how to get one of these mortgages, how they work, and why you should seek professional advice before applying for one.

What is private mortgage lending and how does it work?

Private mortgage lending is a bespoke form of borrowing usually reserved for customers who qualify for high net worth exemption, which requires having an annual income of £300,000 or assets worth £3 million or more.

This type of lending can be far more flexible than a traditional mortgage agreement as private lenders are not bound by the same restrictions as the mainstream market. They can offer personalised mortgages on a case-by-case basis, and this often means customers can access deals that simply aren’t possible elsewhere, from higher income multiples to uncapped loan amounts.

Many of the lenders who offer private lending operate exclusively through mortgage brokers, so you might struggle to secure their services without the help of a specialist advisor.

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Why choose this type of lending?

Private lending is a personalised service and the lenders provide it pride themselves on offering enhanced confidentiality and discretion. This is attractive to many high net worth individuals, but other reasons people choose this option include…

  • To borrow based on much higher income multiples, from seven times income upwards
  • To take out a much larger mortgage than they could on the high street
  • To secure a mortgage against assets, such as a stocks and shares portfolio
  • To negotiate the rates, terms and conditions from scratch

Depending on the amount you need to borrow, it may be possible to use a high street lender as an alternative to a private mortgage provider. This might mean paying lower fees and finding it easier to gain direct access to your lender, but it could also mean missing out on a much more favourable bespoke deal that could be privately arranged.

How to get a private mortgage

If you meet the high net worth exemption criteria, there’s a quick and easy way to find a private mortgage lender. Just follow these steps…

  1. Get your documents together: You’ll need proof of your high net worth exemption and, if you’re borrowing against assets, an assets and liabilities statement. You’ll also need the general paperwork required for any mortgage application, such as proof of ID, address and deposit funds. You can find a full list of the documents needed in our guide to mortgage applications.
  2. Speak to a high net worth mortgage broker: This is usually a non-negotiable step if you want access to private lenders as most of them operate exclusively through intermediaries. We work with brokers who specialise in private lending, and they have the knowledge, experience and contacts to help you find the right lender for you. Make an enquiry with us and we’ll introduce you to one of these advisors for free.
  3. Let your broker take things from here: Once you’ve been matched with a broker they will introduce you to potential lenders who work privately. One of the big benefits of using a broker for this type of lending is that they can negotiate a bespoke deal on your behalf, and from here, they will make sure you get the best rates and terms possible.
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Do high-street banks offer private mortgages?

Yes. Many of the biggest high street lenders have private mortgage arms, including…

  • Natwest
  • Barclays
  • HSBC
  • Clydesdale
  • Lloyds

To qualify for private lending with these banks and building societies, you will need to meet the criteria for high net worth exemption. Bespoke deals are available, but keep in mind that high street lenders tend to place caps on the amount you can borrow, even on a private basis. Around £10 million is not an uncommon ceiling.

The brokers we work with have contacts in the private departments of these mainstream lenders, which means they can access them directly and compare the deals they’d be willing to offer on your behalf.

This is another significant benefit of using a high net worth broker: they can compare what the private arms of mainstream lenders might be willing to offer you and compare it to that of private mortgage providers.

Taking out a second mortgage

It’s possible to take out a second mortgage on a private basis. If you qualify for high net worth exemption, there’s a strong chance the lender will be convinced that you’re capable of paying two mortgages at once and be comfortable offering you a bespoke deal. The exact rates and terms you’ll be offered will be decided on a case-by-case basis.

Second mortgages are typically treated more strictly than first mortgages, and the same can be true for private lending. This can mean higher interest rates, lower loan to value (LTV) ratios, and a stricter financial stress test.

Private buy-to-let mortgages

Private buy-to-let mortgages are available and they are assessed much the same as regular investment property mortgages. As is the case with private residential mortgages, these mortgages are offered on a bespoke basis but the kind of deal you’ll be offered will be determined by the strength of the investment and the potential rental income.

There are no strict rules on what percentage of rental income you’ll need, especially if you were to secure the mortgage against assets. Deposit requirements can, however, be higher than for private residential mortgages, which typically have a loan-to-value ratio of 90%, unless secured against a very liquid asset like cash.

Commercial mortgages

It is also possible to take out a commercial mortgage through a private lender. In fact, private lenders take up a disproportionately large share of the commercial mortgage market, due to the often ‘bespoke’ nature of commercial financing agreements.

You’ll very often find specialist private lenders behind the financing of some of the larger commercial mortgages, your typical high street bank or building society has much less of an appetite for that kind of risk.

See our guide to large commercial mortgages for more information.

What if you have bad credit?

This isn’t a deal-breaker like it could be for a regular mortgage. Lending criteria for private mortgages isn’t as rigid as it is on the high street since private lenders are generally more concerned about the security property and the overall strength of the application. They have the flexibility to offer finance to customers with all types of bad credit and will only be concerned if your adverse puts the deal directly at risk.

That said, if you have severe bad credit on your file, expect the lender to ask you about the circumstances surrounding it. In some cases, it might impact the type of deal you qualify for.

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Get matched with a private mortgage specialist

If you’re looking for a private mortgage, you’re likely to struggle without the help of a specialist broker. Many of the lenders who occupy this space operate exclusively through intermediaries, but the advice you need is at hand.

We work with brokers who specialise in high net worth lending and private mortgages, and they have the exact knowledge, expertise and lender contacts you need to secure the best bespoke 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 the private mortgage broker who’s best placed to help you get the finance you need today.

FAQs

Can I get a private mortgage if I’m self-employed?

Yes. In fact, many people who qualify for high net worth mortgage exemption are self-employed and private lenders fully realise this. These lenders are well placed to cater for the needs of wealthy self-employed individuals and are flexible enough to accept complex income and offer bespoke deals based on it.

Can I get a private interest-only mortgage?

Yes, and these are relatively common. To get approved for a private interest-only mortgage you will need to evidence a repayment vehicle and convince the lender that it will generate enough capital to pay off the mortgage debt at the end of the term.

This is an option some high net worth individuals choose if their income is relatively limited but their investments.

Can I get a private mortgage in Ireland?

Yes. The high net worth mortgage brokers we work with have access to private lenders all over the UK, including in Ireland. The rules around high net worth exemption are no different over there and mortgages for people who fit this criteria are negotiated on a bespoke basis.

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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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