High net worth (HNW) individuals in the UK often have unique financial circumstances that require tailored mortgage solutions. Unlike regular borrowers, HNW clients typically have substantial assets, complex income structures, or significant investment portfolios that can all be considered as security for financing property purchase or remortgage.
To accommodate HNW clients, lenders often have a range of bespoke mortgage products or large loan underwriting teams to service the needs of these clients. The following five mortgage solutions are suitable for HNW clients seeking debt for residential or investment properties.
- Interest-Only Mortgages
An interest-only mortgage allows borrowers to only service the interest on the loan for a fixed period, often ranging between 1 to 5 years. This approach is particularly popular amongst HNW clients who:
- Have irregular income streams, such as business owners or entrepreneurs.
- Intend to use windfall payments like bonuses, dividends, or the sale of assets to repay the loan.
- Wish to keep monthly outgoings low to free up cash for investments or other purposes.
A robust repayment strategy needs to be in place to ensure the loan is cleared by the end of the term. In line with this, lenders will often require evidence of repayment plans, such as stock or property portfolios, savings or investment statements, or other assets.
- Offset Mortgages
Offset mortgages are well-suited to HNW clients who have significant savings or have a surplus of income over outgoings. These products provide a savings account which is linked to the mortgage, allowing the savings balance to offset the amount of interest charged on the mortgage loan. For example, if a borrower has a mortgage of £2 million and £1.2 million in linked savings, interest will only be charged on the difference of £800,000. Crucially, unlike making overpayments on a traditional mortgage, it is easy to access the funds held within the linked savings account, which keeps these funds liquid.
Offset mortgages are appealing to HNW clients because:
- They can reduce interest payments over the loan term.
- They retain access to savings while lowering mortgage costs.
Offset mortgages are ideal for clients who want flexibility and are not reliant on earning interest from savings.
- Private Bank Mortgages
Private banks specialise in bespoke lending solutions for HNW individuals, be it personal, commercial or mortgage loans. They often assess clients’ overall wealth holistically including assets, investments, and future earning potential, rather than relying solely on income alone, which may not be sufficient for some borrowers. Private bank mortgages typically provide:
- High borrowing limits, often exceeding the standard mortgage caps available from High Street banks.
- Greater flexibility in structuring loans.
- Discreet and personalised service – something often sought-after by HNW individuals.
Private banks may also assess a client’s broader financial plan, offering tailored solutions against investment portfolios, combining business and personal borrowing needs if required.
- High Loan-To-Value Mortgages
High loan to value mortgages refer to property finance where the loan exceeds 80% of the property value or above.
As a product often favoured by HNW individuals, high loan-to-value mortgages see clients obtain substantial debt financing for their property purchase or refinance, subsequently retaining their own wealth and liquidity. When the loan amount exceeds £1 million it becomes more difficult to find lenders willing to lend at high loan-to-values, but there are some mainstream and specialist lenders who provide such products with lending criteria which is tailored HNW borrowers.
High loan-to-value mortgages:
- Can offer HNW borrowers a loan of up to 80%, or above, of the property’s value
- Need robust security. For example, assets under management or substantial wealth to support a loan of high value.
- Mortgages without Assets Under Management (AUM)
Traditionally, HNW individuals looking to secure a private banking relationship placed assets under management (AUM) as security against a large loan. However, as the market has become increasingly competitive, lenders have begun to offer large mortgage products to clients without the need for assets under management. Instead, they choose to base applications on the client’s overall profile and not just the deal in question.
Mortgages without assets under management, also known as ‘dry lending’, provide HNW clients with:
- Bespoke lending options, without the need for a previous private bank relationship with the lender.
- Assess affordability by taking wider wealth, income and asset profile into account, no matter where the assets are held.
Factors to Consider for HNW Mortgages
Navigating the HNW mortgage landscape can be complex, which is why it’s important to seek professional advice. By speaking with a specialist HNW mortgage adviser, clients can learn more about the products that are available to them which best suit their requirements. Speaking to a high value mortgage adviser at LDN Finance may help you consider the following:
- Lender Requirements: Lenders catering to HNW clients often require comprehensive financial disclosure, including proof of assets, income, and repayment strategies. Our advisers are on hand to partner with you, taking you through the application step by step.
- Flexibility and Customisation: Bespoke terms, such as overpayment options or early repayment flexibility, are often essential for HNW clients and with our help, our advisers have exclusive access to products that you wouldn’t be able to obtain directly.
- Interest Rates and Fees: Specialised mortgages may come with higher rates or fees. However, the added flexibility often outweighs these costs for affluent clients. For clients turning to LDN Finance, our long-standing relationships with whole of market lenders means we’re in a favourable position to negotiate for more competitive rates.
High net worth clients in the UK have access to a diverse range of mortgage options tailored to their unique circumstances, from interest-only and offset mortgages to private bank lending and multi-currency solutions. Depending on the needs of the HNW borrower, these products can offer flexibility, customisation and significant borrowing potential.
By understanding the nuances of these products and seeking expert advice, HNW individuals can secure financing that complements their financial strategies and supports their property ambitions. To see how the expert advisers at LDN Finance can help you to source your next mortgage, get in touch today.