People are often surprised that major celebrities take out mortgages. Why not just buy properties outright? Current low interest rates mean high-net-worth individuals (HNWIs) are potentially better off placing their money in alternative assets or investments with more lucrative returns.
The world's most well-known stars must also still pass the same mortgage affordability tests as everyone else. However, these assessments are not designed to account for celebrity earnings, which fluctuate wildly from year to year based on their professional commitments and projects.
A complex, highly variable income profile can be a warning sign for many lenders, which is why even superstars often need specialist assistance when seeking a multimillion-pound mortgage.
Investec Private Bank was approached by a well-known celebrity who owns multiple properties worldwide and was seeking a 'jumbo' mortgage on their London home.
The borrower needed a £11 million mortgage, but their earnings were unpredictable due to differing work commitments and ventures that altered from year to year depending on a variety of factors. The LTV on the loan was relatively low at 43%, yet the individual's comprehensive property portfolio, including mortgages across multiple homes and BTL properties, needed to be considered.
Investec Private Bank have considerable experience working with HNWIs who have unique or unusual income profiles, including the occasional household name.
On this occasion, we offered an interest-only solution that would be paid down with annual capital reductions. This could enable the borrower to obtain a supersized mortgage on a multi-millionpound home, while giving them the flexibility to repay the principal on a schedule that suits them and their earning patterns.
Here at Investec Private Bank, we treat all our prospective clients like stars. You don't need to be a famous athlete, chart-topping musician or award-winning actor to have bespoke mortgage requirements that need a special approach. Our mortgage intermediary team is dedicated to taking a more holistic view of an applicant's financial strengths, which ensures HNWIs with unpredictable income patterns can benefit from mortgage offers tailored specifically to their individual circumstances.