This is certainly true for those looking for a large mortgage. The private banks have traditionally provided the answer when it comes to large mortgages for high-net-worth borrowers, as many high-street banks have not been keen on lending much above £1m. If you have a large proportion of your income from variable bonuses or commission, for example, the private banks are known for having more sophisticated underwriting, often tailoring the product and rate to fit the individual. They look at applicants on a case-by-case basis and really get to know the client.
But increasingly, high-street lenders are prepared to offer larger loans – at competitive rates. Platform, the part of the Co-operative which lends via mortgage brokers, has not only launched one of the market-leading rates at 0.79 per cent fixed for two years, it is available on mortgages up to £2m.
One potential downside of the private banks is that they sometimes want to establish a relationship with the borrower, whereby you transfer assets under management (AUM) with them, although not all insist on this. There is no such requirement from high-street lenders, which is why it can be a more straightforward solution for many borrowers.
While still ensuring borrowers meet affordability criteria, several high-street lenders have also increased their loan-to-income (LTI) multiples for higher-earning applicants, enabling them to get a bigger mortgage. For example, HSBC has increased its LTI to 5.5 for borrowers earning £100,000 or more across its entire range up to 90 per cent loan-to-value. Other lenders increasing income multiples for those on higher salaries include Metro Bank, Barclays and Ipswich Building Society.
Some banks are also relaxing their rules as to how much bonus income they will take into account – Halifax recently doubled the bonus, commission and overtime income it uses in its affordability assessments from 30 to 60 per cent after cutting them during the pandemic. With bonuses returning this year for many workers as financial companies reverse heavy losses during the pandemic, it is increasingly important for these borrowers that lenders take as much of this income as possible into account.
If you require a large mortgages, a whole-of-market broker such as AWS Private Finance will identify whether a private bank or high-street lender offers the best option and pricing. We have excellent relationships with the private banks so can recommend one where required, but we will also consider more mainstream lenders too. Please get in touch for more information.