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Bespoke Mortgages
To put an end to the kinds of risky lending that contributed to the financial crisis of 2008, many mainstream lenders introduced more rigid ‘tick-box’ approaches for lending to minimise the degree to which these lenders were exposing themselves to risk.
An unfortunate but inevitable by-product of these approaches is that often high street lenders do not offer the flexibility of criteria necessary to accommodate the needs of individuals with complex wealth profiles.
Since a large proportion of sophisticated, high-net-worth borrowers have such complex income profiles, these individuals are often having to look elsewhere when attempting to acquire property finance. Bespoke mortgages offer a solution for these types of borrowers.
How do bespoke mortgages work?
Private Banks, specialist lenders, and some mainstream lenders offer bespoke mortgages that give a far greater degree of criteria flexibility than their standard ranges. Many mainstream mortgage lenders introduced bespoke mortgage solutions to compete with Private Banks, seeking to attract the types of high-net-worth clients that would previously have been ineligible for mortgages with these institutions.
Bespoke mortgages offer a degree of flexibility in their criteria.
What bespoke criteria do these mortgages offer?
These bespoke mortgages offer improved flexibility on a wide variety of criteria. A few examples include:
- Taking into account larger percentages of bonus income than they would using the criteria of their standard mortgages.
- Factoring in several years’ worth of bonuses, or bonuses in previous roles, when calculating the affordability of the loan rather than the standard two years.
- Considering vested/vesting stock into their calculations.
- Offering interest-only mortgages at much higher loan-to-values than is usual, provided the borrower earns more than a set amount of income. This is often £250k per year.
- Using retained profits, or adding back in pension contributions, when assessing self-employed income for limited company directors
- ‘Monetising’ background assets, such as SIPPs and ISAs, to supplement income and thereby ‘boost’ affordability
These bespoke criteria are therefore working to open mainstream lending up to a wider range of borrowers whose complex financial circumstances resist incorporation by the rigid affordability calculations of their standard ranges.
SIPP = Self-invested personal pension
ISA = Individual Savings Accounts
A bespoke mortgage solution tailored to your needs
Through our well-established partnerships with over 175 lenders, we open doors to Private Banks and specialist mortgage lenders, some of which do not have a consumer-facing presence. Using these strong connections, we have the possibility to arrange bespoke solutions with lenders and access exclusive rates.
If you would like to discuss your circumstances and whether you are eligible for a bespoke solution, you can make a mortgage enquiry here or call us on 0800 980 8777.
