Best high net worth mortgage deals

What is a high net worth mortgage?

A large mortgage is typically a mortgage for over £1m. If you’re looking to buy or refinance a high value property and want to apply for a large mortgage over a million pounds, you’ll generally need to be classed as a high net worth customer. This essentially means you must either be a high earner or own a significant amount of assets.

Some of these deals are more flexible than standard mortgages and lenders may be willing to:

• Consider income from multiple sources
• Offer interest-only or part-and-part repayment options
• Work with bespoke underwriting, outside of standard criteria
• Look at assets such as investments, bonuses or business income

You’ll also often have access to private banks or specialist lenders who can offer a more personal service.

Who are considered high net worth individuals?

The Financial Conduct Authority defines a high net worth individual as a customer with an annual net income of over £300,000, or one who has assets giving a total wealth of £3 million or more. Typically, these customers will have more complicated financial situations and income from many different sources such as a property portfolio or investments.

It is important to point out that you don’t have to meet the above definition to qualify for a large mortgage with lenders as long as it meets their affordability requirements.

High net worth clients may not always have a large amount of liquid assets but could provide other means of collateral. This is where, with the help of a high net worth mortgage broker, specialist lenders may be able to provide more bespoke mortgage solutions than those that would be available from most standard mortgage lenders.

Why choose a high net worth mortgage?

A high net worth mortgage (typically with a private or specialist bank) could be right for you if:

• You have complex income (e.g. dividends, bonuses, foreign income)
• You want to borrow over £1 million
• You have significant assets but only a modest taxable income
• You need flexible repayment terms

Some of the key benefits include:

• Bespoke underwriting where lenders can look at your full financial picture
• Flexible repayment structures that can include interest-only or tailored payment plans
• Higher loan-to-value options where some lenders may lend up to 95% of the property value
• Private banks often give you a dedicated relationship managers where you’ll have one point of contact

Which lenders offer high net worth mortgages?

There are several high street lenders who will offer mortgages of £1m or above if you’re planning to purchase or refinance a high value property. Whilst these can be a good option if your income and outgoings are straightforward, a more bespoke solution might be required if, for example, most of your income is from vested shares or long term incentive plans.

High street lenders might also not be suitable if you need to borrow a large percentage of the value of the property, as they will usually have a maximum loan-to-value, which effectively caps the size of the mortgage they are prepared to offer you, once you start exceeding certain loan thresholds. This can also be true of private banks as they can sometimes be stricter as they are flexing in other areas.

Where more specialist solutions are required, private banks may be your option. They can often be more flexible than mainstream lenders when it comes to high value mortgages, agreeing to lend based on individual circumstances and an assessment of overall wealth rather than sticking to more rigid lending criteria, although they may come with higher costs.

Why choose a private bank?

Private banks can help meet the needs of high net worth customers by really getting to know you and your unique circumstances like complex income structures. They can consider factors such as your source of wealth and the value of any assets you hold if you are looking for a high income multiple, whilst at the same time often providing competitive rates for a large loan.

Unusual properties, such as those with large acreage or outbuildings/annexes, and ownership structures including on and offshore trusts or Special Purpose Vehicles (SPVs) can be considered by private banks for high net worth mortgages, whereas they might not be considered by high street lenders on a standard mortgage application.

How high net worth mortgages work

If your high net worth mortgage doesn’t quite sit with the high street lender due to one or more complexities around your income, property type or individual circumstance, private banks may be able to offer a solution and look at things like:

• Your full asset base (including property, savings, pensions and investments)
• Business income or retained profit
• International assets or foreign income streams
• Unusual bonus or commission structures
• Trust income or inheritance

They may also offer more flexible lending terms, especially if you have a strong relationship with a private bank.

Who can apply for a mortgage from a private bank?

Some, but not all, private banks will be looking for customers to fall into the definition of a high net worth (HNW) individual as mentioned earlier (either currently or in the future).

Assets under management vs dry lending

Some private banks might insist that you hold a minimum amount of assets and investments with them first, known as ‘assets under management.’ The amount of assets under management typically ranges from a minimum of £500k to 50% of the amount you’re looking to borrow and could consist of various types of investments.

However, there are a growing number of private banks that will offer large mortgages without any assets under management, which is known as ‘dry lending'.

What else you need to know

If you’re taking out a high value mortgage through a private bank, typically the amount you’ll be able to borrow will be restricted to 60–65% of the property value. However, if you are in a particularly strong financial position, it is possible that some may consider as much as 95% of the property value, providing you agree to pay back some of the capital at various stages over a defined period.

Loan to values will tend to fall as the property value increases, so limits will be more restrictive on very expensive properties.

How to find the best high net worth mortgage deals

There’s no one-size-fits-all deal for high net worth borrowers. These mortgages are often arranged on a case-by-case basis and may not always be shown on standard mortgage comparison sites.

We work with over 90 lenders, including private banks and boutique lenders who specialise in large or complex loans. Our advisers know which lenders are best suited to your income and financial structure.

We can also help negotiate terms, whether you’re looking for a fixed rate, tracker, or interest-only arrangement.

Making repayments on a high net worth mortgage

Depending on the lender, you could choose:

• Repayment – paying back the loan and interest over time
• Interest-only – lower monthly payments, with the loan paid off at the end using savings or investments
• Part-and-part – a mix of both
• Low start – where the loan is on an interest only basis for an initial period with annual pre-agreed repayments and then reverts to a standard repayment mortgage.

If you have strong investments or expect future liquidity, interest-only might be a smart choice, and some lenders will be open to bespoke repayment plans.

You may also be able to adjust your payments if your income varies, or you make large overpayments without penalties.

Arrangement fees

If you’re taking out a large or high net worth mortgage there will usually be arrangement fees to pay, so it’s important to factor these into the overall cost of any deal. Arrangement fees will usually either be a set amount, or a percentage of the amount.

If you are taking out a high value mortgage, a deal with a lower interest rate but higher arrangement fee may workout to be more cost-effective than a deal with a slightly higher interest rate but a lower arrangement fee. Remember that there will also be survey and legal costs to pay.

Private banks typically charge a 0.50% - 1% arrangement fee and survey and legal costs will also need to be covered separately.