Solutions with a Different Approach
The Mortgage Broker offer highly skilled advisers with experience in working with High Net Worth individuals and portfolios.
The process for high net worth mortgages is a little different from that of a standard run-of-the-mill mortgage and it requires a different approach, with smart and clear planning and application.
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0800 0320 316High Net Worth Mortgage Solutions:
- High loan-to-value mortgages
- Highly customised lending solutions for high-net-worth individuals
- Complex income and wealth specialists
- Extensive interest-only options
- Solutions for intricate ownership structures, including onshore and offshore trusts, limited companies, foundations and funds
- Access to every bank who lends against UK real estate
- Expert independent specialist knowledge
If you are a high net worth individual we understand that your income may not align with a traditional salary such as from a single wage package, but rather may be from alternative and/or multiple income streams.
If you fit this profile then you may be wondering how your financial situation might appear to lenders and how to go about obtaining a mortgage to suit you.
Don’t worry, because here at The Mortgage Broker we are aware of the unique conditions facing higher-income customers and our team is highly experienced in finding the best mortgage for your particular needs.
What is a high net worth mortgage?
This is a specialised type of mortgage that is designed and intended for customers who have a large net worth, a high income, or hold assets of a high value.
So, the question is; what constitutes a ‘high net worth’ or a ‘high income’?
The Financial Conduct Authority defines a high net worth mortgage customer as an individual with a net income of £300,000 per year (or more) or with net assets of no less than £3,000,000 – or an individual whose obligations are guaranteed by a person with an income or assets of this amount.
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Why would someone need a high net worth mortgage?
As noted above, high net worth mortgages are often required by customers who have a very high income or net worth, whose income may come from sources other than from the typical wages or salary associated with a traditional career or profession.
Because of the higher than average income or net worth, such individuals may be eligible for large mortgage loans.
However, when someone has a net income in excess of £300,000 per year it is not usually from a regular pay cheque, but rather from some form of entrepreneurship or investments, which often means a more complex and convoluted financial situation.
Some examples of alternative income streams could include:
- Income from the stock market
- Large bonuses or commissions
- Income from rental properties
- Company or partnership profits
- Contractor returns
- A large pension
- An offshore trust
- Royalties from creative works such as from music or writing
- Profits from investments
- Passive income streams
And many others.
What other type of customer may require a high net-worth mortgage?
As well as catering to high-income individuals, specialist mortgage brokers may be needed by individuals who have a non-standard income such as a foreign currency income, a trust fund, or a large but irregular income.
Another customer that may need the services of a high net worth mortgage broker is an individual who is ‘asset rich but income poor’, in other words, someone who has a large net worth but not necessarily a large regular income as such.
Asset-backed mortgages
In the case of customers whose large income may be delayed for various reasons, a lender will usually require a guarantee of some description. Assets such as property, antiques, high-value vehicles, works of art, jewellery and other valuables may be considered appropriate as collateral in the event of a default.
These types of complex income mortgages can often be viewed as too high risk by regular high street lenders, who also may lack the time, resources and expertise to deal with these types of loans. For these reasons, a high net worth mortgage broker, with experience in these types of mortgages, would usually be a more appropriate choice for such borrowers.
A conventional mortgage is usually a loan to an individual who has a standard job and a regular wage which may be their only source of income. This type of mortgage could be considered standardised or ‘ready-made’ although of course it will be individually calculated based on the customer’s salary, expenditure, credit rating and other considerations of risk to the lender. When a customer applies for a traditional type of mortgage, a high street lender will typically follow a fairly standard procedure to evaluate their creditworthiness and make assessments using a series of checkboxes to calculate the size and terms of a potential mortgage offer. By contrast, a high net worth mortgage demands a much more custom-tailored approach, taking into account many other factors, which require a more detailed and flexible approach. This will usually take more time and can involve evaluating more complicated income streams. Because of this, these types of loans can be considered to be complex income mortgages. These types of loan would usually be organised through a high net worth mortgage broker who specialises in bespoke arrangements of this type. Arranging a large custom-designed loan through high-net-worth mortgage brokers or specialist lenders will result in a mortgage which has been designed to suit the high net worth customer’s unique circumstances and requirements. Speak directly to an expert:Are complex income mortgages arranged differently?
Why would a high income customer need a mortgage at all?
If an individual has access to large sums of money, why would they need to borrow money to buy a property?
There could be several reasons, for example not wanting to tie up capital which could be better used as an investment vehicle. Using a large amount of money to buy a property outright may not be the most efficient use of those funds.
A high income earner may find that obtaining a large mortgage loan is a more financially astute way of purchasing a property.
Another advantage of a mortgage is that a property may be purchased before funds from investments have reached an individual’s bank account.
What are the key benefits of complex income mortgages?
There are several advantages that complex income mortgages offer, such as::
- Greater LTV (loan to value) ratios
- Higher loan amounts
- Flexible repayment options
- Customised lending
Other benefits could include:
- A more personalised service
- Flexible underwriting
- Potential tax advantages
Because high net worth mortgage brokers are actioning a more detailed and individualised financial assessment, the resulting mortgage offer could well be considerably higher and more competitive than a standard run-of-the-mill mortgage.
Complex income mortgages may also have more flexibility in their repayment terms such as interest-only repayments, a longer repayment period or even deferred repayments.
What are some disadvantages of complex income mortgages?
Some drawbacks of complex income mortgages can include:
- Higher interest rates
- More complicated application
- More administrative paperwork
- Longer process generally
A high net worth mortgage will typically have a better LTV ratio than a normal high street mortgage offer. A loan-to-value (LTV) ratio is a calculation of risk to the lender that a bank undertakes before making a mortgage offer. Usually, a high LTV ratio means a higher loan amount, however it is also considered a higher risk loan and for this reason high net worth mortgage rates can also be correspondingly higher.
Complex income mortgages are highly personalised large mortgage loans and as such require a more detailed assessment of lending risk. Because high net worth mortgage brokers will need to evaluate more complex information, this will usually take a longer time to process and will produce more paperwork.
It’s also worth noting that although this type of mortgage may have many advantages, it can still be affected by fluctuations in the market generally.
Other types of large mortgage loans
There are many different types of higher income and complex income mortgages, such as:
- Jumbo mortgages
- Interest-only mortgages
- Adjustable rate mortgages (ARMs)
- Fixed rate mortgages
- Offset mortgages
- Part-repayment mortgages
- Repayment mortgages
And more.
Jumbo (and super-jumbo) mortgages are (as the name suggests) mortgages of very large loan amounts. The threshold for large mortgage loans may vary, but typically it will be an amount of about £500,000 to £750,000 with high net worth mortgage brokers in London even setting the bar at £1,000,000 or more. This is based on higher average property prices and incomes in the city. Some high net worth mortgages in London can run into the tens of millions of pounds for certain desirable properties.
Such large mortgage loans are useful to high net worth customers that are looking to purchase expensive properties that fall outside the range of typical loan amounts.
With Interest-only mortgages a regular interest payment only is made and then the outstanding loan amount is repaid when the property is sold.
To qualify for an interest-only mortgage a customer will usually have to provide a large deposit due to the increased risk for the lender.
An adjustable rate mortgage (or ARM) is also known as a variable rate mortgage or a floating mortgage. This type of mortgage is a loan where the rate fluctuates according to current market conditions. A customer will benefit when rates fall but is also at the mercy of potential increased rates although rates will typically be capped so there is an upper limit on what a customer would have to pay. Another important consideration is a borrower’s credit score where a superior credit score will usually mean a lower rate.
Fixed rate mortgages will offer a stable interest rate for a certain period of time (maybe 2, 5, or 10 years) which makes payments more predictable and easier to budget.
Part-and-part mortgages – Part-repayment, part-interest-only mortgages are a mix of an interest-only mortgage and a repayment mortgage. This type of repayment offers flexibility to a high-income customer who can choose to make better use of their available funds for other investment opportunities instead of making full repayments on their mortgage.
Offset mortgages can be popular with borrowers who have large amounts of savings that they may wish to access in the future. An offset mortgage will allow a customer to deduct their savings from the balance of the loan so that interest is only paid on the difference and the full deposit amount is therefore not tied up in the property.
Repayment mortgage – of course a large mortgage loan can also be a simple repayment mortgage where regular monthly payments are made along with interest. A typical deposit will be required – usually 10% or more. For a large mortgage loan the monthly repayments will of course be higher, in line with the larger amount borrowed.
How to go about getting a high net worth mortgage
If you think that you may require a high net worth mortgage, let us help you. We are experts in these types of loans and have decades of experience as well as industry-wide contacts.
Your first step would be to contact us and then our experienced, professional and friendly team will get the ball rolling immediately for you.
We have a head office in Cambridgeshire and we can offer you expert advice in person, via telephone, email, video chat or Whatsapp – whatever suits you best. The Mortgage Broker team is here to support you and we are highly experienced in all types of complex income mortgages.
Why choose The Mortgage Broker for your high net worth mortgage?
We offer a superior mortgage service that is tailor-made to your needs. We have access to a huge range of mortgage products and lenders so we can find the very best deal for your unique requirements, without any impact on your credit score.
We are experienced in the full range of mortgages including large mortgage loans, complex income mortgages, customised lending, asset-rich but income-poor borrowers, flexible repayment mortgages, high-income and/or high-net-worth customers, and much more.
What are the next steps to getting a high-net-worth mortgage?
After you contact us, our team will discuss with you your requirements to find out what type of property you have in mind to buy. We will ask you about your income and expenditure, any properties you may currently own, your financial commitments and other loans you might have, as well as any assets you may hold. A credit check will need to be performed. We will obtain from you any relevant financial information so we can help you to obtain the best possible deal.
Contact us today and let us find you the most suitable high net worth mortgage.
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