However, with almost a million millionaire households in the UK, it’s likely you will come across a HNW individual with complex income streams very soon. Partnering with a private bank can help you find a solution fast – I explain why in Specialist Banking magazine.
The way in which we perceive the sector we work in and indeed the job we do can at times differ to the way others see it.
I was reminded of this recently when reading an article on Specialist Banking about brokers’ views on private banks.
Like many segments within the mortgage market, private banks have on occasion struggled to shake the image that sometimes precedes them – one of an elitist or unapproachable institution.
Great strides have been made in negating this stereotype, but there still appears to be a level of apprehension among some brokers when it comes to using private banks. As one commentator in the article noted: “Most brokers feel that private banking is out of their depth and only a small band of expert brokers are truly comfortable working with a range of private banks.”
Another commented that brokers may feel daunted by the prospect of using a private bank in the same way they might if advising on development or commercial finance.
Private banks are there to serve those whose circumstances may not fit into the mould of a retail bank.
How accessible are private banks?
With almost a million millionaire households in the UK, there is a strong chance you will come across a potential client of a private bank very soon.
Yes, private banking is a specialist sector of the mortgage market, but when handling a client with the necessary requirements, there’s nothing to stop a broker working with a private banker. It’s simply a case of knowing what a private bank can offer, and matching it with the needs of a client – we’re a lending option that brokers should feel free to utilise in the right circumstances.
As the article conveyed, private banks tend to receive regular business from a small group of intermediaries who are very familiar with high net worth lending. Here at Investec Private Bank, we are receiving increasing levels of enquiries from new intermediary firms. This is something we welcome and have a dedicated team for.
Working together for a quick result
The article also speaks of how the private banking process can be “very slow” and could go “very wrong” if the broker does not know what they are doing. Another commentator remarked that a broker may need to “negotiate the best terms” for their client.
We cannot comment for all private banks, but at Investec Private Bank we work in partnership with the intermediary firm and assist them in structuring an appropriate solution for all parties.
The key to a successful conclusion with any mortgage case is to understand the client’s current financial profile and their requirements.
So what do you need to know before you pick up the phone or fire off an email to a private bank? As a starting point, most private banks have a minimum yearly earnings requirement – ours is £300,000 with a net worth of at least £3m.
We can usually ascertain within a few minutes of hearing the fundamentals of the case as to whether we can potentially help. Most private banks will require details of the client’s earnings over the last three years, their net assets, the property’s details and an outline of the case requirements.
It is not lost on me that private banks are there to serve those whose circumstances may not fit into the mould of a retail bank.
When it comes to the benefits that a private bank can bring to the table, we can be flexible, may be able to incorporate more of the client’s income and assets into the affordability assessment, and are well placed to assist those with complex income streams – including those in a foreign currency.
So, while we may be a different beast to the high street, we are not one to be feared.
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