25 May 2021

5 facts you need to know about high-net-worth mortgage cases

Working on a mortgage case for a high-net-worth individual? Peter Izard, head of the intermediary business development team at Investec, explains how to find the best solution for your client and ensure the process runs smoothly.

Like all clients, high-net-worth (HNW) individuals want to secure their ideal home when they find it. However, their income structure and lending needs differ from most. This is where Brokers and specialist banks such as Investec can help.

 

Investec provides banking and wealth management services to successful, wealth creating clients, who are often time-poor and works with mortgage intermediaries to offer bespoke mortgage solutions with greater flexibility and scope than many retail banks.

 

If you’re sourcing a mortgage for a HNW individual, here are five learnings to be aware of.

 

Please reach out to the Investec team if you want to discuss a case or need more information.

1. When it comes to high-net-worth clients, mortgage applications are not a tick-box exercise

While many retail lenders will calculate maximum loan-to-value as a multiple of annual salary, it’s important to consider wealth holistically. Many of our clients work in sectors such as private equity, investment banking or entrepreneurship and receive part of their income in stocks, bonuses or dividends – which may also be deferred. Investec is able to take this future income into account when assessing affordability.

2. Client biographies are essential

To create an accurate picture of overall wealth, Brokers should be able to provide an in-depth summary of their client’s background including their career and business ventures. This can help lenders like Investec understand the client’s track record.

old period style building living room
Peter Izard, Mortgage Intermediaries team, Investec

For clients with complex income streams, flexible repayment plans can be a higher priority than low mortgage fees or interest rates.

3. Debt is not a dirty word

For ambitious individuals, borrowing to buy a home or investment property can be part of a wealth creation strategy, particularly in a time of low interest rates. A mortgage allows clients to protect existing investments as well as ensuring maximum tax planning can be accommodated.

 

For this reason, it’s common for mortgage applicants to have other assets or to want to preserve liquidity and this is not necessarily detrimental. In fact, it reflects a growth mind-set.

4. Flexible repayment schedules are as important as interest rates

For clients with complex income streams, flexible repayment plans can be a higher priority than low mortgage fees or interest rates.

 

A mortgage could allow them to make capital reductions to coincide with their cash flow and leave other investments untouched. In practice, this can mean lower monthly repayments on an interest-only basis.

Peter Izard, Investec Private Bank
Peter Izard, Mortgage Intermediaries team, Investec

Lenders like Investec work on a number of cases for HNW individuals and are familiar with many of the challenges in this space. 

5. Saving time is saving money

We all want to save time for our priorities. Brokers can demonstrate their value by being efficient and finding suitable mortgage options as quickly as possible. Lenders like Investec work on a number of cases for HNW individuals and are familiar with many of the challenges in this space. Please do get in touch if we can help.

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