High net worth mortgages are not just for the wealthy or people who have a high income. Many people who are asset rich can also qualify for this type of loan. These types of mortgages can be hard to get your head around, especially if you think you might qualify for one. In this blog, we'll go over what a high net worth mortgage is, look at the high net worth mortgage customer definition, and explain how you can get one if you have the right qualifications.
A high net worth mortgage is typically a loan for people with a high income. These people usually have a lot of assets and want to borrow more than they can get on the open market. The loan is usually large, and it's often for a longer period than normal mortgages. A high net worth mortgage is also a way for people whose assets are tied up to get a loan for a house that they might not be able to afford otherwise. The loan is based on both income and assets, rather than solely on how much money someone makes each month.
The threshold for the mortgage is an annual net income of around £300,000 or someone who has assets worth over £3 million. These mortgages can be used to develop a property portfolio with investments.
find me a mortgageIf you're looking for a high-net-worth mortgage, the first step is to find a lender that offers them. While every lender has its criteria for approving mortgages and deciding what qualifies as "high net worth," it's common to see banks and other lenders offering these products if your income is above £300k per year.
Once you've found a lender, they'll ask for information about yourself, such as your employment status and current income level. If they approve the loan, they may ask for more documentation (like proof of how much money you have in investment accounts). The exact nature of this process will vary depending on which bank or financial institution is involved.
They might also ask for documents from third parties—for example, receipts from accountants showing annual profits over £300k in recent years and letters from employers, which verify that your salary level meets regulatory requirements. This helps to prove that you do have enough cash flow coming in each month and can afford the repayments.
As the name suggests, high net worth mortgages are loans that require higher deposits to secure. Because of this, they are typically offered at lower interest rates than other types of mortgages. The loan amount you can borrow is also usually higher. This means that you can borrow more money over the term of your loan.
High net worth mortgages allow borrowers to repay their debts in flexible ways, which means they're more willing to accommodate clients who have irregular income patterns or seasonal fluctuations in income levels (like commission-based jobs). These loans may also come with longer repayment periods compared to other mortgage options. This means you'll pay less per month overall but take longer to repay your debt altogether (accruing more interest).
Given that it's easier for high-net-worth individuals like doctors and lawyers with stable careers and incomes to get approved for these loans than others who aren't as financially well off, lenders don't require as much documentation confirming their employment status and/or financial situation before approving these types of loans as they do with other types, such as first-time buyer mortgages. People on lower incomes may be subjected to more vigorous checks.
Customers with high net worth mortgages are typically defined as those that have at least £3m of assets, including property and investments.
A high net worth mortgage customer is defined as a customer with an annual net income of no less than £300,000 or net assets of no less than £3,000,000, or whose obligations are guaranteed by a person with an income or assets of such amount. Some lenders may look at additional criteria however the clients must meet the criteria explained above to be a high net worth mortgage customer.
However, if you own several properties across the country and have plenty of income from rental homes, then it's likely that more lenders will be willing to consider providing funds for your purchase.
If you have a low income but have substantial assets, you may still be able to get a high net worth mortgage but it will likely be asset-backed. This means the debt is secured against high-value assets, like stocks and shares portfolios, rather than the property itself.
If you have a bad credit score, such as a low amount of borrowing compared to income or a history of late payments, it is still possible to get a high net worth mortgage. You will need to show evidence that you have a stable income and can pay your mortgage in full every month. In addition, if you have problems with debts or money management, it may also be beneficial for you to seek financial advice from an independent specialist before applying for a high-net-worth mortgage.
Now you know what the high net worth mortgage customer definition is, get in touch with us at WIS Mortgages for free advice or use our mortgage calculators to see if you qualify.
NOTE: As a mortgage is secured against your home/property, it may be repossessed if you do not keep up with the mortgage repayments.
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