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If you are looking for high net worth mortgage finance, approaching an expert is increasingly advisable. With more and more high street mortgage lenders shying away from large loans, it has never been more important to seek professional advice from a mortgage expert when you are looking to buy a home or to refinance your property.
We look at why high street mortgage lenders don’t get involved in the large mortgage market and why specialist brokers are the people to approach for a high value mortgage.
Some mainstream lenders have dabbled in the large mortgage market in the past. Halifax and the Royal Bank of Scotland became active in the high net worth client market before the global financial crisis, but have since pulled out.
Experts expect high street mortgage lenders to once again try and take some of this share of the market in future, but at present they are not a player. Ben Thompson, Legal & General Mortgage Club managing director, there has been ‘a little more interest from the mainstream lenders’, who have ‘very quietly begun to express more interest. It will be slow progress though.’
Mr Thompson added: “I expect to see [more competition] if someone decided to make a play into the middle or upper end of the market. There is a reasonable level of interest in the £500,000 to £2m because that seems to be the area deemed lower risk in this higher risk market.”
Hugh Wade-Jones, director of London mortgage broker Enness Private Clients, said: “The high value mortgage market is a specialist area which, frankly, most mainstream lenders don’t have the expertise to deal with.
“It’s unlikely that you would get the likes of Santander or Nationwide operating in a market with large mortgages over £1 million. Firstly, they don‘t have the underwriting expertise and the flexibility to agree such a loan, and secondly, a multi million pound loan simply represents too much of a risk for a retail bank.”
While they may be better known for their investment divisions, private banks are the main players in the high net worth finance market. These banks can tailor rates, ‘loan to values’ and mortgage terms to suit almost client provided they have the right assets or income.
While they can offer excellent rates, the private bank market is invariably about asset management. Lenders often make it a condition of the mortgage that clients transfer some or all of their investment portfolio or deposits to the bank.
While clients are often initially reluctant to move assets, the potential savings on mortgage interest can often sway a decision, says Wade-Jones, the London mortgage advisor.
“That is where we come in as a broker and find where someone fits,” he says. “People are often closed to the idea initially but can warm up quickly, particularly if they are borrowing larger sums of money, and you can, say, shave 50 basis points off.”