Securing High Net Worth Mortgage In The UK

What Defines a High Net Worth Mortgage?

High net worth mortgages cater to wealthy individuals who meet specific financial criteria. According to the FCA definition, the qualifying thresholds are:

• Minimum net assets of £3 million
• Minimum annual income of £300,000

Lenders classify mortgages for high-net-worth borrowers differently than mainstream residential loans. The market offers you exclusive access to:

• Higher loan-to-values
• Larger loan sizes
• Competitive interest rates
• Bespoke terms and conditions

Ultimately, high-net-worth mortgages provide greater flexibility for wealthy investors and homebuyers like yourself.

Why You Should Choose a High-Net-Worth Mortgage

As a wealthy individual, you may choose these niche mortgages over high street offerings for several key reasons:

Access Exclusive Rates & Deals

Specialist lenders develop exclusive mortgages for high-net-worth borrowers. With luxury properties and extensive portfolios, you need access to low-rate deals outside of what high-street banks offer.

The right broker connects you to lenders offering the most competitive interest rates.

Higher Income Multiples

Mainstream lenders typically limit borrowing to 4.5 times your income. Many high-net-worth lenders base affordability on a multiple of seven times your annual earnings or more.

With higher multiples, you can secure larger loans while retaining capital to invest elsewhere.

Flexible Lending Criteria

Lenders can personalise mortgage terms based on what you can afford rather than rigid criteria. For example, low-income, asset-rich investors can secure lending against their portfolios.

Flexible lending ensures you find borrow-what-you-can-afford solutions.

Asset-Backed High Net Worth Mortgages

One route wealthier individuals pursue is an asset-backed mortgage. Rather than securing the loan against the property, lenders use your valuable assets.

Typical assets include:

• Stocks and shares
• Investment portfolios
• Luxury vehicles
• Art and collectables
• Property investment portfolios

Using assets rather than income evidence has significant advantages:

• Access larger loan amounts
• Retain asset ownership
• Usually lower interest rates
• Buy without liquidating assets

With expert brokers assessing affordability, you could borrow over seven times your income.

Remortgaging High Net Worth Deals

If you have an existing high net-worth mortgage, refinancing or remortgaging could secure better terms. Specialist brokers have extensive lender contacts to find exclusive refinancing deals.

With routinely fluctuating interest rates, regularly reviewing your high-net-worth mortgage ensures it aligns with affordability and supports your investment strategy.

Options for Bad Credit Borrowers

Typically lenders assess credit reports before approving mortgages. However, for high net worth lending your asset wealth carries more weight than spotless credit history.

Provided you meet the net asset thresholds, demonstrating your ability to make repayments is often enough for lenders to overlook minor credit issues.

The right broker matches you with appropriate lenders who may disregard historic financial problems. Being open from the start allows them to source the most suitable solution.

What Interest Rates Should You Expect?

If you’re a high-net-worth individual exploring mortgage options, it’s crucial to know what sort of interest rates to expect. 

In the UK’s ever-changing mortgage market, the rates can vary, but there are some general trends we can look at.

As of late 2023, the average mortgage rates are hovering around a bit higher than what you might expect. For a fixed mortgage, the rates are around 4.69%. That’s the general market rate. But, if you’re in the high net worth category, you might be in for some better deals.

High-net-worth individuals often have access to more favourable rates compared to the general market. 

This is because banks and lenders see them as lower-risk borrowers due to their strong financial background. 

While it’s not common, some high-net-worth clients can find deals with interest rates significantly lower than the average.

Now, you might hear about sub-1% deals or fixed-rate mortgages starting from as low as 0.99%. These sound amazing, but they’re quite rare and not the norm. 

Most high net worth borrowers will likely find rates that are better than the average, but not necessarily as low as these figures.

For the latest and most accurate rates, checking with financial institutions or using a mortgage broker can provide you with information tailored to your financial standing.

How Much Do High Net Worth Mortgage Brokers Cost?

When it comes to high-net-worth mortgages, the costs can be a bit different from your typical home loan. Let’s look at what you might need to budget for if you’re considering one of these hefty mortgages.

• Interest Rates. This is a biggie. The interest rate on your mortgage will depend on various factors like how much you’re borrowing and your financial status. Generally, the rates might be competitive, but they can vary quite a bit.
• Arrangement Fees. These are fees charged by the lender for setting up the mortgage. For high net-worth mortgages, these can be about 0.5% to 1% of the loan amount. So, if you borrow, say, £2 million, you could be looking at £10,000 to £20,000 in arrangement fees.
• Valuation Fees. Before a lender gives you a mortgage, they’ll want to check out the property’s worth. This valuation can cost you a few hundred to a few thousand pounds, depending on the property’s size and value.
• Legal Fees. You’ll need a solicitor to handle all the legal bits of buying a house, and their fees can vary widely. For high-value properties, these fees can be quite substantial, often running into thousands of pounds.
• Stamp Duty. This is a tax you pay when you buy a property over a certain value in the UK. For expensive properties, stamp duty can be a significant chunk of change. The exact amount depends on the property price and whether it’s your first home or an additional property.
• Broker Fees. If you use a mortgage broker to find your high net worth mortgage, they might charge a fee for their services. This could be a flat fee or a percentage of the loan amount.

Remember, with high-net-worth mortgages, the devil is in the details. It’s not just about the interest rate but all these other costs that add up. 

So, make sure you chat with your mortgage broker to get the full picture and budget accordingly. After all, knowing what you’re up for helps you make the best decision for your big investment.

What Information Will My Broker Need?

High net worth brokers require extensive information to source appropriate lending, including details on:

• Personal & Contact Details – Confirming your identity, residence, and contact information.
• Income Evidence – Tax returns, PAYE, dividends, rental income, pensions and expenses.
• Asset Values – Property portfolios, luxury vehicles, investments, and company ownership percentages.
• Existing Mortgages – Terms, outstanding balances, rental income if an investment.
• Credit Report – Verifying defaults, missed payments, bankruptcy or similar.
• Future Financial Plans – Retirement plans impact mortgage terms and affordability. Proactively organising documentation simplifies applications to release funds faster.

Additional Requirements for Larger Deposits

When you’re looking at buying a really expensive property, the amount you need for a deposit generally goes up too. This is because bigger loans often come with stricter rules about how much the loan is compared to the property’s value.

Let’s say you want to buy a property worth £4,000,000. If the lender has a loan-to-value limit of 50%, you’ll need to put down a £2,000,000 deposit. That’s half the property’s value.

Now, lenders know that such a big deposit isn’t likely to just come from your savings. As someone with a high net worth, you might get this money from different places, like:

• Selling a property in the UK
• Selling a property abroad
• Using cash from your investments
• Money from an inheritance or a trust
• A gift from your family
• Proceeds from selling a business

No matter where the money comes from, the lender will want to see proof. They need to check these details for their own rules and legal reasons too. This is just to make sure everything is above board and the money is coming from a legitimate source.

Protecting Your Assets

When you have a lot of money to invest, it’s not just about finding a good mortgage deal. You also want to make sure your assets are safe. This is where specialist brokers come in handy. They’re experts in creating custom solutions to protect your wealth, like:

• Using offshore lending structures can help with tax management.
• Buying properties through trusts or companies.
• Spread your investments across different countries to reduce risk.

The goal here is to keep your wealth safe, especially the part you use as security for loans. Good brokers know how to balance protecting your assets while making the most of your wealth.

Finding the Best High Net Worth Mortgage Broker

Choosing the right broker for high-net-worth mortgages can be tricky because there’s a lot to consider. Here’s what to look out for in a good broker:

• They should be experts in high-net-worth lending. This means they know their stuff in this specific area.
• They can talk directly to the big decision-makers at major lending institutions.
• They’re used to dealing with really big transactions, we’re talking seven figures!
• They take time to understand exactly what you need.
• They have great reviews from other clients, which shows they can do what they say.

With a lot at stake, you’ll want to take your time to find the best broker for you. It’s all about making sure your wealth is not only safe but also working hard for you.

The Bottom Line

Getting into high-net-worth mortgages is simpler than you might think, especially if you have a lot of assets and a high income. 

These mortgages are great because they’re made just for people like you. They let you borrow more money and offer special deals that aren’t available to everyone.

These mortgages can be tailored to fit your situation, whether your money comes from different sources or you own things like art or investments. Plus, if you’re thinking about refinancing, you have even more options to find terms that work better for you.

The most important thing is to work with the right mortgage broker. A good broker who knows all about high-net-worth lending can sort out all the details for you, like figuring out interest rates and fees.

If you’re interested in high-net-worth mortgages, we’re here to help. Contact us, and we’ll set up a free chat with an expert broker. They’ll help you find the best mortgage for your big plans, with no strings attached.