High Net Worth Mortgage

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

High net mortgages can only be obtained with quite a small proportion of high street lenders. They’re mainly available through private banking. These banks can be more pragmatic in how a client’s financial position meets affordability and lending requirements.

Clients in this high net worth bracket are often seeking higher loans that are more in line with their needs. They can also have unique income sources, complex company structures, large property portfolios or assets and investments.

The banding for high net worth individuals is around £170,000 in net income and around £430,000 in assets, which could be property or investments. That generally gives us more ammunition to achieve clients’ required borrowing levels.

It’s quite difficult to find options for high net worth mortgages, as there’s no centralised open market where we can see everything as with standard mortgages. But through our experience, we’ve created relationships with private banks like Investec and Handelsbanken. We understand what they tend to accept and the rates they’re offering.

We’re in a good position to look at high net worth mortgages in private banking as well as more standard lending options.

Why are mortgages for high net worth individuals so difficult?

People can find it difficult to get mortgages when they’re in a high net worth position. That sounds counterintuitive, but it could be that they have a unique method of earning. Or, perhaps this particular tax year their income is lower, but they’ve otherwise got a very strong financial position.

High street lenders can’t take the pragmatic view that we may need. When high net worth individuals are finding mortgages difficult, it’s often just that they’ve found lending to be less easily achievable as they thought.

I wouldn’t say that these cases are necessarily difficult. They are complex by their nature, and we may need a bank to be pragmatic, but they aren’t difficult.

We can utilise different areas of criteria and income streams that the high street may not accept. That’s what differentiates this. We can find a more tailored solution than you can find on the high street.

How much is considered high net worth? Who qualifies as high net worth?

There are a couple of definitions here. The FCA definition as of 2024 is £170,000 in net earnings per year – not gross – and net assets of £430,000 or more. That could be a blend of property equity and investments.

It might be that a client meets one of those criteria but not the other. Private banks tend to like to have at least one of those fulfilled, or very close. That’s where they can step in with bespoke lending options.

Generally, high net worth individuals that meet this criteria have additional options through leveraging their property, investments or other assets. That could allow for a lower income in some situations.

Another example could be a client who works in capital events.This is very different to the standard employed or self-employed customer, who have a steady income and documents to demonstrate how that income is generated.

Clients that work in capital events may invest in businesses and property and dispose of them a few years down the line. They may have periods where their income is quite modest, and then a big, infrequent capital event.

It might take a few years to wait for that large return. For these types of clients we focus on the high net worth definition around assets. They might have much more than £430,000 in assets that can generate the lending we need.

Banks on the high street generally look at the most recent two years’ tax returns for the self-employed. But for a client that works in capital events, we need to consider a longer track record to give the bank a broader overview of what this client does and their earnings potential.

This is where private banking for high net worth individuals is beneficial compared with the high street, which tends to be inflexible. These private banks take a more pragmatic, tailored approach.

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

This is fairly standardised across all kinds of lending. On residential mortgages there’s typically a 5% minimum deposit and it’s a 20% to 25% minimum deposit for Buy to Let.

How much you can borrow is a crucial question. The high street tends to base a mortgage on 4.5 times to six times gross earned income. This is actually similar for high net worth individuals, or even slightly less.

But if we’re able to envelop more potential income and assets, we don’t need quite as much of an income stretch – as we’re utilising more to begin with. That’s the big difference.

Again, the amount of borrowing will vary from each individual bank and building society, both on the high street and in the private banking sphere. It’s all down to the specifics of the case and the individual.

Do high net worth individuals need life insurance?

Yes – it’s the same for everybody. Having large assets creates the same need for them to be correctly secured with life insurance or other types of protection. If you’re a business owner, you’d potentially consider Relevant Life Insurance as a director of a limited company, for example.

With both high net worth individuals and regular clients we are required to discuss this area, under Consumer Duty rules. We always advise you to make sure that any liability is covered.

The bank will place a note in the mortgage offer to recommend that protection advice is obtained. Solicitors do the same. It’s still completely relevant, as it would be for anybody.