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High Net Worth Mortgages – Some Tips
If you are considered a high net worth individual, then you may be wondering if there are specialist lenders and mortgage products out there for you. Your net worth is calculated by subtracting all of the debts from the total assets you have.
What is High Net Worth?
When it comes to mortgages, lenders consider anyone who earns £300,000 or more annually or has assets worth that amount as having a ‘high net worth’. A high Net Worth mortgage can be slightly more complicated than your standard residential mortgage.
They are typically expected to be paid off quickly and are used for people who maybe don’t want to put all of their capital in the property to purchase it outright yet.
Why can it be difficult to get a High Net Worth mortgage?
If you own multiple properties or a lot of assets, then it can sometimes be difficult to assess your income. Some lenders will not take assets into account and will focus on only streams of income.
Not all mortgage products for high net worth individuals are authorised and regulated by the financial conduct authority and you may need the help of a mortgage adviser to find the right lender for you.
How much will I be able to borrow?
It is the same as a residential or commercial mortgage you can expect to be able to access five times your annual salary. You will need to prove all of your income and outgoings.
Many high net worth borrowers will lend through accounts that are offshore which can cause issues when it comes to tracing finances so if you want these included it may be best to speak to an expert.
Lenders will still look into your credit score and check to see if you have any outstanding debt. Lenders will not always look into both your income and your assets so you need to ensure you find the right lender for your needs.
What assets should I include for a High Net Worth mortgage?
You should include the following assets and ensure they are declared:
- Cash assets
- Physical Assets – jewellery, property etc.
- Non-physical assets – pensions, bonds etc.
- Liquid Assets – stocks
- Fixed Assets – furniture
- Equity Assets
- Fixed Income Assets.
Lenders will look at your assets and determine how much they are worth before allowing you onto a mortgage with them. Physical assets are the most sought after by lenders as they are easy to sell in case of missing a mortgage repayment!
What deposit do I need for a High Net Worth mortgage?
You will still need to provide a 10% deposit to secure the mortgage you are applying for. The larger the deposit the lower the interest rate is going to be in regards to repayments on your mortgage.
High Net Worth and Self-Employed
No matter how complex your income is you are going to have to prove it to the lender in order to secure a mortgage. It is not uncommon for people who are considered to have a high net worth to be Self-Employed.
It is important to look into the lender’s criteria when it comes to accountants as some require for you to have a chartered accountant run through your income. You need to seek a lender who looks at the income you want them to look at; for example, assets and retained profits could be overlooked by one lender and included by another.
Can a High Net Worth individual get a Buy to Let mortgage?
Yes, you can still access Buy to Let deals as a high net worth borrower; Buy to Let mortgages tend to have affordability checks based on the potential rental earnings of the property you are getting the buy to let deal on but a lender will also check your streams of income.
What Loan to Value (LTV) can I get on a High Net Worth mortgage?
This completely depends on your financial situation and will vary between lenders too. Some people have been able to secure up to 95% high loan to value mortgage on multi-million pound properties as they have a strong income stream and chances to earn more in the future.
How can IMS help you?
It can be stressful when it comes to mortgage applications especially if you have a complex income. You may have private finances and commercial property as assets that you want to be taken into account, IMS can help find the right lender for you.
There are a lot of mortgage products that are not offered by high street lenders and can only be found on the independent mortgage market. IMS has a team of expert mortgage advisers ready to help discuss and aid your mortgage application and give mortgage advice throughout to ensure you understand your commitments.