Custom built mortgages for the wealthy launched by private bank

Written by Ray Clancy

Tuesday, 07 December 2010 10:10

Custom built mortgages based on income and wealth rather than property have been launched for high net worth professionals.

The new £Million Plus mortgages from Investec Specialist Private Bank are aimed at those who accrue irregular income such as lump sum bonuses. The banks say that they will take overall income and wealth into account rather than just the value of an individual’s property and their regular monthly income.

The loans are aimed at the top end of the market, with loans available exclusively to individuals with sustainable overall earnings in excess of £300,000 a year and an established personal net worth in excess of £3 million who are looking to borrow a minimum of £1 million. These individuals are typically purchasing properties worth in excess of £1.5 million.

‘We expect our product to be particularly popular among City professionals, many of whom are set to receive sizeable bonuses over the coming months as part of their overall remuneration packages,’ said Jack Jones of Investec Specialist Private Bank.

‘However, a number of these individuals struggle to get mortgages and other personal loans approved as many banks are geared towards far less flexible lending criteria and are not easily able to create bespoke offerings for individual clients,’ he explained.

Research conducted in October 2010 by Investec among over 100 City professionals reveals three quarters, 74%, of those who are expecting a bonus believe that it will be bigger than last year while 11% believe that it will be the same size. Just under one in ten, some 8%, are anticipating a smaller bonus than in 2009/20102.

Signs that confidence is returning to the City are supported by the latest research from the Centre for Economics and Business Research (CEBR), which estimates that overall, pre-tax bonuses will be around £7 billion, marginally down on pre-credit crisis levels. It also reveals that the Treasury’s share of bonus income will exceed that of employees for the first time as a result of the new 50% tax rate on incomes over £150,000.

‘Whilst it appears that bonus levels may be returning to pre-credit crunch levels for many City professionals they may still find it difficult to secure a mortgage elsewhere. We have launched this £Million Plus mortgage to cater for clients with irregular income flows which may take the form of bonuses and who find it difficult to obtain larger mortgages, despite having significant personal wealth,’ said Jones.

‘Our new £Million Plus mortgages can be secured against a variety of assets including property, deferred shares, investment holdings and offshore deposits, and are available in a number of currencies,’ he added.