Private lenders have found that banks and ordinary lenders’ conservative guidelines will eliminate many applicants who can repay the mortgage. Most importantly, private lenders consider the total value of the property and its marketability, not just the borrowers’ credit history.
Many private banks offer mortgages to people with high net worth. There are several reasons why wealthy applicants might want to borrow from a private bank. But the key point here is that such people may not be able to meet the original lenders’ requirements.
Lending restrictions have been gradually tightened in recent years, making it difficult for some people to obtain mortgages. Large banks have imposed strict rules on people who may or may not be approved for a mortgage, which means many people may be rejected despite their high net worth.
But how can applicants get mortgages from private banks? This is a question that will be addressed in this article.
How Do Private Bank Mortgages Work?
Private banks are often more cautious about approving mortgages. However, this depends on the bank’s good understanding of the borrowers’ finances. Applicants’ income in recent years, how they invest, and their need for money is among the criteria of private banks. Private banks usually prefer to offer mortgages only to customers who meet these criteria. Another big reason borrowers may be looking for private bank mortgages is the tendency to borrow large amounts of money. But it is very difficult to get large mortgages at competitive rates from private banks.
However, private banks offer much more sophisticated lending facilities than major lenders. They are more likely to consider that borrowers may have significant assets in assets or portfolios and thus look beyond their basic salary criteria. Private banks may also provide multi-currency mortgages and tax advisory investment advice.
Private banks are also flexible in terms of lending. For example, if high net worth people make many transactions with the bank, private banks will likely offer better rates and terms. However, most private banks require borrowers to make a substantial financial commitment. Borrowers can generally use private mortgages under any of the following conditions:
- The borrower wants to buy unconventional properties that the lender or the bank does not finance.
- The borrower needs fast financing and does not want to wait for the approval.
- The borrower’s credit history is bad and is rejected by ordinary lenders.
- The borrower only needs a short-term mortgage.
- The borrower has a non-continuous income that prevents him from receiving a traditional mortgage.
- Private lenders offer specialised mortgages
What criteria do private banks look at when evaluating borrowers?
Private lenders have more stringent guidelines for assessing the borrowers’ affordability than major lenders. In general, private banks look at the following criteria for evaluating borrowers, which, however, are not limited to these cases and may include other criteria depending on the type of case.
- Type and value of the property. This is arguably the most important factor in getting approved by a private lender. The mortgaged property must be in good condition, and a lender makes a thorough assessment of the applicant’s application. If borrowers’ credit scores are poor, customers are considered riskier, and lenders need to ensure that their investment is secure if they do not repay the mortgage.
- Borrowers’ income is divided into verifiable and non-verifiable income. Lenders prefer verifiable incomes. Unconfirmed income, common among self-employed or commission-based professionals, forces lenders to use their income estimates based on their average job income.
- Larger deposits provide more assurance to lenders. In this case, the lender’s risk is reduced, and in this case, they will consider better rates and conditions.
What are the benefits of financing from a private bank?
Financing from private banks will bring many benefits to the borrowers, some of which are mentioned here;
Lending capability and favourable rates
Not all private banks are the same, but a shrewd broker should use the high current income, income growth potential, or significant applicants’ assets to negotiate reasonable mortgage rates.
Relational banking
Private banking is based on personal services, and a private banker communicates privately with the borrowers. However, wealthy clients’ complex income and investment portfolio require their continued management and sound decision-making.
Wealth management services
What sets all these “private banks” apart from micro-banks is their one-tier asset management services in the form of lending and investment services, portfolio management, initial investment opportunities, tax advice and financial planning.
Privacy
For private banking customers who want to protect the details of their financial assets against their business competitors, the privacy of private banking goes beyond the protection of regular banks’ customer data guarantees. A private bank does not usually share borrowers’ financial details with credit rating agencies. This means that borrowers’ mortgages or bank accounts will not exist outside the bank’s internal systems. But, credit rating agencies widely share borrower information to update their credit report.
Private bank mortgage advice using a mortgage broker
In short, the main difference between major lenders and regular lenders is that private lenders consider applicants’ assets based on their ability to repay the mortgage, not just credit history. Each customer is evaluated individually by considering the points mentioned above.
But a good mortgage broker can help borrowers connect with the right private lender. Despite the cost of the brokerage commission, it may be worthwhile for applicants to find a lender who can offer the best mortgage rate for their financial needs.
Through SWG Mortgage’s wide network of private banks, SWG Mortgage advisors guarantee high-value, complex and private bank mortgages in the UK and internationally. SWG Mortgage access and reputation in this part of the market is unparalleled. SWG Mortgage private bank brokerage services include:
- Private bank mortgage for applicants with different needs
- Personal mortgage solutions from 1 million to tens of millions
- High Loan-to-Value ratio for private bank mortgages
- Private bank mortgage solutions for non-British residents
- Suitable for complex revenue and wealth scenarios
- Private bank mortgages with different rates and conditions
- Solutions for complex ownership structures (onshore and offshore trusts, limited companies, foundations, funds, etc.)
- Independent, dedicated and responsive services
Contact us to talk to one of SWG Mortgage specialist advisors about private bank mortgages.
