I arranged a high net worth mortgage for a client last week which is typical of the issues many lenders have with any income other than what is shown on a payslip or SA302. This solution also demonstrates the high net worth exception from the mortgage market review in practice.
My client wanted to refinance his main residence and needed a loan of £1.2 million secured against a £3.2 million pound property. His current lender, with whom the client had banked with for over 5 years and held over £3 million in assets with, would not renew his mortgage due to ‘MMR affordability issues’. These ‘issues’ were that the clients’ income came from investments, sale of a company, director’s loans and other sources typical of a high net worth individual.
The client had spoken to a number of new banks before approaching us, but none were able to assist with his high net worth mortgage requirements.
We had a lender agree to the £1.2 million pound high net worth mortgage on the day he approached us. We discussed the case with a lender we work very closely with (this broker in fact only works with 5 brokers in the entire county). This conversation enabled us to fully demonstrate the clients’ position and demonstrated how the mortgage was affordable and why and how the interest only mortgage was to ultimately be repaid.
To sweeten the deal for the lender our client agreed to have 6 months worth of mortgage payments held on account for the duration of the loan.
As for the mortgage – 2.99% fixed for 3 years, interest only with a £2,000 fee. The mortgage was formally agreed within 3 days of receiving the full application. Including valuation and legals we completed the case in 4 weeks.
Regarding high net worth mortgages ‘affordability’ for high net worth individuals, non UK residents and business owners is tough – especially over £1m. We clarify the situation and make the lender fully aware of the situation making affordability less contentious, especially in light of the under utilised but fully available HNW exemptions.