Properties in the London capital along with other major cities have seen an increase in value in recent years. This means a larger mortgage loan may be required to secure the kind of home you want to live within. Typically ‘off the shelf’ products offered by high street lenders do not generally allow for borrowing above £1 million. The income you derive may be from multiple earned and unearned sources making the application more complex. This is where having an experienced broker working on your side can be both useful and cost-effective.
HIGH NET WORTH (HNW) MORTGAGES
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- A bespoke solution may be created if a suitable product is not already offered.
- A loan to value (LTV) of at least 90% is required in the majority of cases.
- Various income sources considered in relation to affordability including pension and investment income along with employed or self-employed earnings.
- Earned and unearned income sources from multiple sources which fall outside of what would be recognised in standard ‘off the shelf’ products;
- Require a tax-efficient method of purchasing the property, with the ability to take additional risk where appropriate;
- Have alternative assets held in physical form that wish to be included in lieu of future repayment and ongoing affordability
The difficulty in creating HNW products
We understand the importance of allocating your wealth according to your personal circumstances and wishes. Putting in place a mortgage arrangement should be no different, meaning having a suitable range of options is key. We acknowledge that wealthy borrowers have greater difficulty in obtaining finance in comparison to mass-market clients.
This is because a more bespoke solution is often required that ensures your wealth is organised to provide the maximum opportunities to grow in a tax-efficient way. Therefore ‘off the shelf’ retail products generally are not suitable.
How a lender assesses your application
Directors of limited companies
“You either pay tax or interest”
This is a common phrase in regards to situations where borrowing is taking place alongside a business. By utilising available tax avoidance strategies, your accountant may enable you to reduce both you and your company’s level of taxation due. The issue with this is that it creates greater difficulties when trying to ascertain credit or secured lending such as a mortgage. Lenders may have further questions regarding affordability and only offer a smaller loan despite being able to repay on time.
Benefits of our mortgage advice service
Whole of market
Our panel of lenders include both high street institutions and specialist companies that can offer bespoke mortgage products specific to your circumstances.
We take a long-term view to organising your mortgage, taking into account your future goals to find a solution that works both now and going forward.
Save you time
By understanding the general criteria of different lenders, we work to focus our search on products that offer the best opportunities for acceptance and are cost-effective.
As a company, we are privately owned and therefore are not tied to any insurance company. We work for you rather than someone else to find you the best deal.
We know that a mortgage is a large commitment and continue to remain in contact with you to ensure your selected product remains suitable over the term of the loan.
Save you money
Some of our lenders only accept applications from advised clients, but can offer market leading rates. This can result in a considerable saving over the term of the loan.
Things to consider
For applications for larger amounts, the availability of other assets you may own can be an important factor in helping lenders assess your application fully. For mass-market products, amidst tighter lender controls many assets are generally ignored. Liquid assets including alternative investments (rare coins, antiques, luxury cars, jewellery and handbags) may be considered to demonstrate affordability. This shows the lender that should you be unable to meet payments, these assets can be sold to realise funds.
The type of property you are looking to purchase will have some bearing on how your application is assessed for affordability. Whilst new build homes are eligible for mortgage funding, the requirements for testing ongoing affordability is different if you want to buy a traditional, aged property. There are inherently larger costs of upkeep and maintenance with these homes which will affect how the lender will assess ongoing disposable income. This is because both you and the lender have the motivation to ensure the property is maintained to a good standard both internally and externally.
Since 2015, the number of interest-only products within the market have declined. The reason is because of the need to put in place a plan for repayment at the end of the term. With other assets that have value available, this improves the chances of being accepted for this type of product.
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HNW Mortgage insights
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