Comprehensive Guide for High Net Worth Individuals
Your property may be repossessed if you do not keep up repayments on your mortgage.
Defining High Net Worth Status and Borrowing Capacity
High net worth status varies significantly depending on location. In the North West, a property valued at £500,000 might qualify as high net worth, whereas in areas like London, the benchmark is closer to £1 million. Qualifying as a high net worth individual depends on income size and how earnings are generated, reflecting both financial capability and economic context.
Borrowing capacity for high net worth individuals depends on factors such as income, credit score, and property specifics. While strong earnings are essential, a low credit score or small deposit may require specialised lending solutions. Specialist lenders often step in to cater to complex or niche situations, ensuring tailored solutions for unique financial profiles.
FAQ'S
How does a high net worth mortgage work? What are my options?
These mortgages work the same as one for £100,000 or £200,000. It’s all going to come down to how you earn your money, the lender criteria and the property, which I’ll explore more in the coming questions.
It’s very individual, so you definitely should go and see a broker. You could pick up the phone to your own bank – but they might not be able to help. It depends on the property and various other factors.
A lot of lenders offer the same products whether you’re buying a house for £100,000 or £2 million. I could sit here all day and go through each lender’s criteria, but it’s very individual.
Is it more difficult to get a mortgage as a high net worth individual?
It’s not the mortgage that’s difficult. It could be that we’re dealing with people that earn a lot of money, and we’re looking at high mortgage lending. They could be self-employed. It could be that the way that they take money out of the business might not seem enough on paper.
A broker could help with that. If they’re self-employed, we could look at net profit in the company as opposed to what they’ve actually taken and paid personal tax on.
You could also be looking at houses that might have seven or eight bedrooms – which aren’t the norm. A lot of lenders won’t allow that on their criteria. We might be looking at houses that have more than one kitchen. Again, many lenders don’t like that, and the same goes for annexes in the garden.
It can be a bit of a jigsaw puzzle with so many different variables. We need to do a full fact-find to discover how the client earns their money, what they’re looking to borrow and the sort of property they’re looking to buy. Then we piece it all together to find the right lender.
Life Insurance: Protecting Your Financial Commitments
Life insurance, while not mandatory, is highly recommended for high net worth individuals. It provides financial security for dependents in the event of unforeseen circumstances. Protecting your largest financial commitment with insurance ensures stability for your family, particularly if you’re the primary earner. The cost of insurance should be factored into the overall affordability of the property. Mortgage brokers often advise clients to consider life insurance, especially when taking on significant financial obligations, as it can offer peace of mind and protection for loved ones.
Remortgaging and Capital Raising for High Net Worth Individuals
Remortgaging and capital raising follow similar principles to standard mortgages but often involve higher property values and specialised lender criteria. Borrowing limits are governed by Loan-to-Value ratios, which vary depending on the loan’s purpose. High net worth individuals may seek to raise capital for home improvements, purchase additional properties, or consolidate debt. However, higher property values may limit the pool of available lenders. Mortgage brokers play a crucial role in navigating these complexities, providing tailored solutions by accessing specialist lenders and aligning borrower needs with lender criteria.
Vulnerable Customer
We understand that from time to time our clients may find themselves dealing with circumstances which could mean they are potentially vulnerable. For example, a change in health, caring for a family member or coping with the loss of a loved one. There are many different types of vulnerability, and what makes one person vulnerable might not affect someone else. When we are vulnerable, our need for financial advice may change. However, admitting vulnerability or seeking help can sometimes feel hard.
If this is something you would like to discuss with us, please ask for a copy of our support guide or download a copy here. This guide is designed to help explain vulnerability and the ways in which we might be able to support you. If you feel any of the circumstances in the brochure apply to you, please talk to us.
