The prime property market is booming with the number of £5m-plus luxury homes sold in London in the final months of last year reaching a new record high, according to estate agent Savills. The return of overseas buyers, now that international travel is opening up once again, along with a surge of interest from wealthy domestic buyers for London homes, is fueling the boom. Some 522 sales of such homes occurred last year, with 163 £5m-plus homes sold in the final quarter of the year.
Wealthy borrowers are also finding that banks are more receptive to large loans than has been the case for a while. For the right client, it is possible to secure 80 per cent loan-to-value on lending north of £30m from a private bank. One might ask why wealthy buyers need mortgages. But if you are earning a 6 per cent return on your assets. Why cash them in to buy property when you can borrow at say, 3 per cent?
While not everyone is in the market for quite such a lavish home. With double-digit house price growth buyers are finding that their money doesn’t go that far these days. Subsequently, many buyers find themselves in need of a £1m-plus mortgage but don’t know where to start.
The private banks have traditionally provided the answer when it comes to large mortgages for high-net-worth borrowers, as many high-street banks have not been keen on lending much above £1m. If you have a large proportion of your income from variable bonuses or commission. The private banks have more sophisticated underwriting, often tailoring the product and rate to fit the individual. They look at applicants on a case-by-case basis and really get to know you. Which may mean you can borrow more on preferential terms.
But knowing which private bank to approach – they are all different and cater for a wide variety of clients. And which individual within that private bank, can seem impossible. This is where a broker such as AWS Private Finance can help. As we have excellent contacts within the private banks. We will be able to advise if your application is best suited to a private bank or a high-street lender. As some of the latter offer large loans to the right applicants. So shouldn’t be ruled out completely.
Some private banks may wish to establish a relationship with the borrower. Requiring that they transfer assets under management (AUM) to them. This can result in more attractive terms as the bank has security to fall back on. But not all insist on AUM so if you would prefer dry lending, that may also be possible.
With a number of lenders recently increasing their loan-to-income multiples for higher earners and/or professionals, and with mortgage pricing edging upwards, now is a good time to get a large mortgages. Please get in touch for more information.