High Net Worth Mortgages - Why you may consider getting one and the problems you may face

 

High net worth mortgages, also known as executive mortgages, are mortgages of £500,000 or more. It is not commonplace for borrowers to take out a mortgage for such a large amount, thus lenders are not always used to dealing with such a large mortgage. Due to this fact, the borrower may be faced with several problems if they are looking to take out a large mortgage.

Who should consider a larger mortgage?
Before approaching a mortgage lender it is wise to ascertain whether you do actually require a mortgage of over £500,000. When calculating the amount to be borrowed, a mortgage lender will take into account your total annual earnings (combined earnings if it is a joint application). They will then apply a multiple on this, which can be 3, 4, or even 5 times for a single application and around 2.5 times for a joint application.

Some lenders use more advanced methods which also consider your expenditure.
If you have a large annual income, either made up of one salary or several sources of income, you are known as a high net worth individual. With more money to spend it makes sense that you will spend more, therefore you’ll most likely be looking for a larger mortgage than someone who has a lower income.

The second aspect lenders take into account when calculating your mortgage is, naturally, the value of the property. A mortgage of up to 85% of the value of the property is usually offered, although this can be as high as around 110%.
Again, it follows that those with more money to spend will be more likely to go for property of a higher value. If you believe you fall into the category of a high net worth individual and are looking to buy a home on the upper end of the property market, you should definitely enquire about high net worth mortgages.

Problems you may face
Some lenders, such as banks and building societies, often have a mortgage limit of £250,000. They are not traditionally large mortgage lenders. Sometimes the issue is a more complex income, which is particularly seen amongst wealthier borrowers. The average person’s income consists of one salary – this is what the banks are used to dealing with. However, the income of some people comprises their salary plus other sources of income, usually generated through investment. This can include business assets or shares in other companies, stocks and shares, overseas income and property shares.

Another problem to consider is, the higher the amount borrowed, the larger the risk, and of course the larger the interest to repay. However, those applying for a high net worth mortgage should have sufficient stable income to deal with these factors without disruption to their financial situation.

Summary
If you are classed as a high net worth individual and are looking for a large mortgage, you may need to look further than your bank or building society to find the right deal for you. There are many financial specialists out there who can advise you on which mortgage and lender is the most suited to your financial circumstances and requirements. Many of these can offer you an online mortgage quote, and a number of companies deal exclusively with high net worth mortgages. In fact, within their staff they have the specific role of High Net Worth Mortgage Advisor. These specialists will be of the most use to you, so search them out! With so many more lenders in today’s market, finding that larger mortgage should not be a problem.

The views in this article represent those of the authors and not those of Speaking Mortgages. This article does not represent financial advice and is purely editorial supplied by third party's. If there is information within this article which you wish to rely on then please check those details with relevant financial or other professionals prior to making any important decisions.