A recent study by Investec has highlighted significant challenges faced by high net worth individuals (HNWIs) in securing mortgages, with 90% experiencing rejections and a majority receiving lower loan-to-value (LTV) ratios than desired.
The research underscores the difficulties encountered by corporate executives, finance professionals, and entrepreneurs, who often have complex remuneration structures that traditional lenders struggle to accommodate.
The primary obstacle for these HNWIs has been the intricacy of their income, such as substantial bonus payments or earnings in foreign currency, leading to an average reduction in LTV by nearly 20 percentage points.
This has necessitated larger deposits, with a significant impact on their ability to purchase property, particularly for those looking at properties valued at £1m or more.
Siobhan Sames, Private Banking Team Lead at Investec, commented on the findings: “Both high-earning professionals and successful entrepreneurs will often struggle to secure the mortgages they want from conventional mainstream lenders due to the complexity of their incomes. It can be hugely frustrating for these HNWIs to be rejected for mortgages or unable to secure the deals they’re looking for.”
Despite these challenges, a quarter of the respondents managed to secure mortgages through specialist banks like Investec, which offer more tailored lending solutions that consider diverse income structures. Investec’s approach, focusing on individual circumstances and understanding the unique financial profiles of HNWIs, has proven effective in addressing the needs of this demographic.
