High Net Worth Mortgages Made Simple

Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon.

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Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon.

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Home » Specialist Mortgages » High Net Worth Mortgages Made Simple

High Net Worth Mortgage

We explore high net worth mortgages with Adam Messer.

How does a high net worth mortgage work? What are my options?

A high net worth mortgage is very similar to any other mortgage – it’s just bigger. The Financial Conduct Authority (FCA) has an official definition, where you need to have an income of £300,000 or net assets of £3 million to be considered a high net worth individual.

For the purposes of this podcast, we’ll assume that anyone who earns a reasonable sum and wants to borrow another reasonable sum – into the millions – is going to be fairly high net worth, whether or not you necessarily meet that official definition.

We would look at how much you earn and your outgoings to assess how much you can borrow. We’re just working with bigger figures than we might for other clients. If you have a high income and need a large mortgage, the options available are plentiful, depending on your requirements.

You do need to meet other criteria, including the deposit. We’ve done a podcast on large mortgage loans where we talk more about deposit, but the more you borrow, the more deposit we need. But there are always lenders that buck the trend – so whatever your situation, generally there’ll be a lender that can help.

Is it more difficult to get mortgages for high net worth individuals?

I wouldn’t have said it was that difficult, but in cases of this nature the income can be more complex than for the average Joe. If you are employed on a salary and get some bonus or commission, that’s fairly straightforward.

But if you’ve got multiple companies owned by a holding company in trust, for example, that’s more complex. That’s probably not a case for Nationwide. We need a lender with slightly different criteria, or one that will take a bespoke or personalised view on your income and how it’s made up.

How much is considered high net worth – who qualifies?

According to the Financial Conduct Authority, It’s £300,000 income or £3 million in net assets – that could be property, equity, or cash in the bank. That’s the official definition.

I don’t tend to get too hung up on that. If you’re earning £295,000 it’s certainly not a whole different scenario for you.

What can I borrow and what sort of deposit is needed as a high net worth individual?

What you can borrow depends on your income. The more you earn, the more you can borrow – just like any other standard mortgage case. It’s just that your income is potentially more complex; it might come from different sources or companies. Ultimately, all the income is combined to work out how much you can borrow.

The deposit may be slightly more. If we were buying a house for £750,000, you could do that with a 10% deposit, no problem. If we’re buying a house for £7.5 million we need more than 10%. I looked at this earlier – you will need at least 30% deposit and even then, only a couple of lenders come up. For the biggest choice of lenders we need a 40% deposit.

There are lenders we can go to for all sorts of situations including private banks and specialist lenders – they all do slightly different things.

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Do high net worth individuals need life insurance?

Everyone does, and not just life insurance. If you’re at this end of the market, often your family income or your business depends solely on you.

We need to make sure you have life insurance. There are companies we can go to that will cover you for the amount you need. We might need slightly more specialist providers, potentially, depending on the amounts we’re talking about.

Life insurance can make sure the mortgage is paid off. I should stress that it’s not a condition of anyone’s mortgage – you don’t have to have it, but I think you’d be a fool not to. I quite happily say that to any clients I talk to.

If you weren’t here or you couldn’t work because you were incapacitated in some way, we need to make sure there’s cover in place. It could protect your income or if it’s life cover, it only pays out if you die.

If you’re ill, there are other products we can have there. It’s really important. In fact, the more you borrow, the more important it is.

How does remortgaging as a high net worth individual work?

To be remortgaging you’ve presumably already got a mortgage which is good news. It depends what you need to do on a remortgage – whether you need to borrow more or make any other changes. There’s lots of remortgage content on the website about that.

If you’re borrowing more, the same things apply that we’ve already spoken about. If you’re just changing mortgage like for like, most lenders will offer you new rates and new products to stay with them – we call that a product transfer.

So you’ve always got an option when you’re faced with your lender’s variable rate at the end of your fixed rate. You can normally choose a new fixed rate even if we can’t remortgage to another lender. We tend to get a better deal by remortgaging, but exactly the same things apply in terms of affordability checks.

Can I get a Buy to Let mortgage as a high net worth individual?

Yes, and the same things apply. If the Buy to Let is in your personal name and you’re a higher rate taxpayer or super taxpayer, you might not be able to borrow as much as someone that doesn’t have as much income and is a basic rate taxpayer.

It’s because of lenders’ stress tests – if you want to know more about that, look at our Buy to Let content. What we tend to see is people acquiring Buy to Lets through limited companies, specifically set up for buying and renting out property – or commercial property.

I’ve got a few larger income clients with Buy to Let portfolios, and it works the same as for anyone else.

What if I have bad credit as a high net worth individual? Will it affect me getting a mortgage?

It’s not something we see often at this end of the scale, but with any mortgage, credit issues may affect your borrowing potential, the deposit you need or the rate that you’re going to get.

The worse your credit is, the more effect it’s going to have. If you’ve missed a credit card payment 12 months ago, that will have virtually no impact at all. If you were bankrupt last week, obviously that’s a much bigger issue.

Anywhere in between, there’s generally a lender we can go to, if you’re prepared to pay for it. The more specialist we have to go, the higher the rate is going to be.

How can a mortgage broker help if you are a high net worth individual?

It’s all about knowledge and criteria. As a team, we have been doing this for a long time – so we know which lenders will accept different cases, from first inspection.

You can’t just go online and search who’s the best mortgage lender or the lowest rate for this type of borrowing – it’s much more bespoke. If you’ve got multiple income sources or complex needs or properties, the lowest rate is irrelevant, really.

We need to find out who’s going to give us the best deal for what you need. We will know that fairly quickly.

If you’re a high net worth individual, chances are you’re a busy person who would be much better off handing all this work over to someone else. We take it all off your hands and do it for you. That’s what we’re here for.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

SOME BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.