If you’re looking for a high net worth mortgage then you’re likely to find a bigger choice of deals in 2013 than at any time in the past few years. An increasing number of mainstream lenders are targeting the high value mortgage market and the choice of million pound mortgages is growing. The Financial Times reports that a number of well known names are now considering lending over £1 million, but brokers have urged high net worth mortgage clients to seek advice before approaching a lender.
High street lenders lack the underwriting expertise to deal with high net worth mortgages
The FT reports that high street giant Santander is piloting a large loan initiative through selected brokers while we recently reported that Investec and Scottish Widows have launched large loan ranges aimed at professionals. Other well-known names that will now considering a million pound mortgage include Woolwich, HSBC, NatWest, Nationwide and Halifax.
Many high street lenders have withdrawn from the large loan market over the last few years and private banks have stepped in to offer high net worth mortgages. However, as activity in the prime UK property market increases, more banks and building societies have begun to offer large loans again.
“While an increasing number of lenders will now consider a high net worth mortgage client, many simply don’t have the underwriting expertise to agree a deal for borrowers with complex income streams,” said Islay Robinson, CEO of London mortgage advisor Enness Private Clients.
“Most high street banks will only consider million pound mortgage deals for clients with very straightforward income and assets. Consequently, most high value mortgage borrowers will still be better served by speaking to a broker who can approach a lender who they know understands their particular situation,” he added.
The FT cites the example of Chelsea Building Society’s best-buy 1.89% two-year fixed rate. While this may be available up to £5 million ‘brokers say only those with simple income streams are likely to be offered the deal.’
In addition, some lenders will charge significantly higher arrangement fees than others. According to mortgage expert Aaron Strutt, Woolwich can charge up to £15,000 in arrangement fees for loans up to £3 million.
The Financial Times reports that ‘private banks will remain the better option for some wealthy borrowers’. As well as having the underwriting expertise to consider unusual ownership arrangements, foreign currency loans and complex income streams, private banks will also often be able to offer more competitive rates.
“Rates can be as low as 2-2.5 per cent for a high net worth mortgage client,” said Islay Robinson, the London mortgage broker. “Some banks will require a borrower to transfer some assets under management to secure a low rate, but this is often a small price to pay for the savings that can be made on a million pound mortgage.
“Private banks also have specialist underwriters with experience of dealing with high net worth finance clients. Sadly, many high street lenders don’t have the expertise or knowledge to understand the financial situation of a high value mortgage client and the complexity of their affairs means they won’t be agreed for a loan,” he added.