Private Bank Mortgage Broker

Does private bank lending require me to move my assets to the bank? Are there relationship requirements for a mortgage?

It goes back to the criteria. Some banks offer a ‘dry lend’ that’s literally just a mortgage. They hope you’re suitably impressed to eventually hand over your other assets in time. Most clients prefer that path.

However, other banks do have minimum requirements – where you might need to put £250,000 on deposit or invest 10% of the loan amount in other assets with that bank.

Normally the quid pro quo is that the pricing gets a bit cheaper, but you have to be comfortable with the level of assets you’re giving to that bank, plus how they manage it and what the costs are. Sometimes it’s not quite clear how that’s going to work. You’ve got to be comfortable.

Some clients are reluctant to pass millions over to a bank that they’ve just met. It can take a bit of time to build that relationship. Conversely, it can be a real great win, especially if they’re unhappy with their current bank and want to move their assets. If by moving they can then unlock more generous lending and better terms, that’s great.

One thing I get clear at the outset is how liquid your assets are and if they can be played with. If so, are you willing to do that? It’s crucial to get that figured out on day one.

What documentation is typically required for a private bank mortgage application?

It’s the usual stuff – ID, bank statements, payslips or accounts to prove your income. Then it gets a little more complicated, because we may need an asset and liability breakdown. Some banks will want us to know what your global wealth is, with evidence.

Origin of wealth can be a challenge, particularly if it’s family money that’s been handed down for generations. It can be difficult to prove where that came from. Perhaps it’s from a jurisdiction the bank’s not happy with, particularly if it’s high-risk or sanctioned.

That’s where some clients get caught out. They might have moved to the UK 10 years ago, and since then a war’s broken out in their home country. Through no fault of their own, they’re sanctioned or embargoed. That does happen quite a lot, but it’s all about finding the right fit.

What types of financing solutions are available through a private bank that aren’t available elsewhere?

The main difference is the default setting of interest only. Some banks only offer interest only facilities, and not repayment.

Another key difference is what can be taken as security. A mortgage is a debt secured against a property, but certain banks do something called Lombard lending, where they will lend against shares or other assets like high value yachts or cars.

That’s technically not a mortgage, but can be part of the facility. Another feature of that is called cross-charging. You might want to buy a property and maybe you don’t have a lot of cash available – a lot of people are asset rich and don’t have a lot of cash.

If they’ve got a million euro yacht we can take a charge over that to plug the gap on the deposit. That example is a Lombard loan with a cross charge – it’s quite complicated.

The last one is called escrow funding. A classic example is where someone’s sold a business and has a lot of cash or other assets, but no definable income. They could give the bank five years’ worth of mortgage payments in cash to buy a property. It means you don’t have to liquidate other assets.

What is holistic or balance sheet lending? Can liquid assets be used to secure better rates or a higher Loan-to-Value?

I’ve explained Lombard loans and cross-charging, which is how this works. High value mortgages can be more expensive, while Lombard loans can be cheaper.

You might start out wanting to borrow against the property, but it could be cheaper to borrow against your shares – and you don’t have to liquidate other assets. That’s what the balance sheet area alludes to.

The stock market might not be going through a great time, but we can simply use the growth over time. You can do something called arbitrage. As an example, if you get an 8% return on your investments, but a bank’s offering you 4% of a loan, you’re still winning 4% year on year. That’s sometimes preferable as well.

What are the typical loan sizes and maximum Loan-to-Value ratios for private bank mortgages?

There aren’t any maximums. With private banking, you can go very big before banks get nervous. The biggest individual loan I’m aware of is £48 million. I didn’t do that one, sadly – a friend of mine did.

You can get very big loans with multiple assets in play, like I mentioned – a large property portfolio, for example. Some banks insist on you investing with them or putting in larger deposits. You might only borrow about 50% or 60% of the property value, because selling those assets is very difficult.

We’re probably dealing with 1% to 2% of the UK population at this level. There’s not a big resale market in this area, which is why banks often ask for larger deposits.

Do private banks offer bridging finance, development finance or commercial mortgages?

Yes. Private banks normally have the permissions to do everything. It’s client-led, not asset-led. A client might own commercial premises or a warehouse, for example, and while the bank won’t normally do commercial loans, they will for that client. If they like the client, they’ll find a way of doing it.

We’ve covered a lot – is there anything you’d like to add?

A key thing about working with a broker here is saving time. If you fall into this world, your time is extremely valuable. You don’t want to be going up and down the high street and speaking to lenders. I’ve seen many times that weeks and months can go by without a client getting anywhere.

It’s just a distraction from your day-to-day. The best thing about working with the broker is that you can focus on what you do, I focus on what I do, and we keep you updated.

The other factor is matching you with the right bank – and the right banker. The value of our advice is massive in this space. With a lot of private banks, they present their terms and you take it or leave it, but they can also be quite bespoke.

We can negotiate that down for you. We mentioned assets under management and moving them around. A bank might insist on this, but can we talk them out of doing it. If a bank really wants a client, we can really sharpen the pencil. That’s a fun game we play, which you just can’t do on the high street.

Key Takeaways:

• Private bank mortgages are for high net worth individuals, typically defined by the FCA as having assets of £3 million or earning over £300,000 annually.
• Private bank lending is typically a five-year, interest-only, variable rate term, offering a holistic view of the client’s finances and flexibility not found with high street loans.
• A private bank mortgage broker is crucial for matching a client’s specific profile (e.g., jurisdiction, wealth origin) with the right banker and bank’s appetite to negotiate the right possible bespoke terms.
• Lending can be offered as a ‘dry lend’ (just a mortgage), or may require the client to move assets or place a minimum deposit with the bank, often resulting in more favourable pricing.
• Unique financing solutions include Lombard lending (securing debt against assets like shares or yachts) and escrow funding (using a cash reserve to cover a fixed period of mortgage payments).
  
  

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

For specialist tax advice, please refer to an accountant or tax specialist.