With interest rates at record lows, and lenders keen to lend, taking out a mortgage can make a lot of sense. This remains the case even if you are a relatively wealthy individual who could buy for cash and doesn’t ‘need’ a mortgage as such. There is some competitive pricing on large loans, from both high-street lenders and the private banks.
Even the wealthiest people tend not to have lots of money sitting in the bank because savings rates are so poor, so they may have to liquidate some investments in order to buy a large property. If those investments are doing quite nicely where they are, this may not be a desirable course of action. Likewise, if you are based overseas and buying property in the UK, you may not wish to bring lots of money onshore.
This is where a large mortgage loan can work. We help many high-net-worth clients obtain large mortgages from high-street lenders and the private banks in order to buy residential property to live in, second homes or high-value buy-to-let investments. We are whole-of-market brokers so we can look at all the products on the market to ensure we find the right product for your particular circumstances.
High street or private bank?
As a general rule, there are some high-street lenders who will lend up to £5m and a few who will even go up to £10m. But if you need to borrow more than this, and even if you don’t but have more complex income or property requirements, a private bank may be the answer.
High-street lenders are offering competitive rates and are best suited for straightforward, vanilla cases where the property is not unusual or complex and the borrower’s income is also uncomplicated. However, not everyone is in this position. If you are buying a more unusual property ¬– a large main house with several cottages in the grounds; a listed building or one of unusual construction; a sizeable farm or estate – it may be that high-street lenders don’t want to lend in that scenario. A private bank could be a better option; their underwriting is more sophisticated and they really get to understand the borrower and their requirements.
Likewise, if you have a complex income structure – perhaps you have your own business and retain profits within it or rely on bonuses for much of your income – you may find that the private banks understand your remuneration better than a high-street lender would. It may mean that you can borrow more than you would otherwise be able to, which could make the difference between being able to buy the property you have set your heart on, or not.
The private banks may charge a slightly higher rate than their high-street equivalents but one of their advantages is that they have more sophisticated underwriting, so can tailor the product and rate to fit the individual borrower. The high-street banks simply can’t offer this level of detail because of the sheer volume of lending they do.
All private banks wish to establish a relationship with the applicant which goes beyond lending them money and some may ask you to transfer assets under management (AUM) over, such as savings, investments or a pension. But increasingly many private banks do not insist upon this.
How AWS can help
At AWS Financial Services, we have plenty of experience in arranging high-value mortgages, from high-street lenders to the private banks. We can advise on the best lender for your circumstances and the best way to structure your application, guiding you through the process from start-to-finish. Please get in touch for more information.