Investec Study Reveals Mortgage Challenges for High Net Worth Individuals

Investec’s research shows many corporate executives, finance professionals, and entrepreneurs with complex income struggle to obtain sufficiently large mortgages through traditional mortgage lenders 

Vast majority of High-Net-Worth individuals (HNWIs) have faced rejections at mortgages levels required, therefore had to accept lower Loan – to – Values (LTV), due to the lender not being able to understand complex renumeration. 

Key results from this Investec research showed:

• 90% have been rejected for mortgages while over 80% were offered a lower LTV than applied for
• Most common rejection was the high LTV which many banks did not consider due to the complexity of their income
• Due to complex income applicants had to reduce their LTV by 20%
• More than one in four were assisted by specialist lenders to secure their mortgage

Complex Finances 

More than four out of five (84%) respondent that in the last 5 years have had to provide larger deposit as they had to accept a lower LTV. On average it was an LTV reduction of 20%, which means and additional £200,000 on a property valued at £1million.

Most common reason for rejection of the LTV requested were:

• Type of property being mortgaged
• Income paid in foreign currency
• Limited credit history in the UK
• Nature of employment, such as being partner in a firm

Nearly two out of three questioned (63%) say they have been out off buying a new home because of these challenges, while more than half (56%) have been deterred from buying an investment property.

High Net Worth Mortgage Trends

Despite challenges, of those surveyed, 36% reported successfully securing a mortgage with a mainstream lender. Alternatively, 24% turned to a specialist bank, the remaining 40% employed a combination of specialist and mainstream banks.

The study also revealed the profound impact of mortgage challenges on purchasing decisions within the HNW community, with 63% expressing reluctance to proceed due to difficulties in securing loans against their assets or income. Furthermore, 53% cited these challenges as deterrents to investing in additional properties.

What is ‘High Net Worth Waiver’

Due to the irregularities, it is hard for lenders to accurately determine what these individuals can afford. To make borrowing viable for these individuals, there is a “High Net Worth Waiver” which is available to borrowers who have a net income of over £300,000 annually or have net assets of £3 million.

The waiver allows applicants to be assessed differently than mainstream borrowers, offering flexibility and assessing an individual’s assets as well as their income to assess when considering offering a mortgage.

Harps Garcha says ‘In addition to main stream lenders who are able to offer mortgages to HNWIs there are a number of specialist lenders available in the market to assist those tricky income structures and offer greater flexibility.”

Connect with our mortgage consultants at 01628 564631 or contact us for personalised assistance.

The information contained within was correct at the time of publication but is subject to change.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage.

Source: Investec