According to the most recent data from the FCA, there are around 340 regulated mortgage lenders and administrators available to the average homeowners, however, mainstream mortgage brokers currently only offer products from 93 of these lenders on average.
With many lenders now tightening their belts in terms of the products and rates offered to homebuyers, options have become more limited. Unless you have access to a secret mortgage, that is.
High-net-worth mortgage broker, Enness Global, has opened up its black book to shine a light on the world of “secret mortgages”, only available to certain homebuyers and from certain channels.
These mortgages won’t be found at your local bank or via a comparison website and to secure one requires a higher level of benefit to the lender than simply borrowing money. You’ll need to have something else to offer them from a business standpoint to stand a chance of qualifying.
These secret mortgages are invitation-only, individually negotiated and highly personalised. Based on the net worth, background, occupation, and wider family wealth of the applicant.
Where can they be found? Group CEO of Enness Global Mortgages, Islay Robinson, explains more.
We all know the big branded private banks – Coutts, Investec and so on. Behind them however is a set of private banks who are very private, ultra-discreet and very selective when it comes to new clients.
These banks will need you to fit with their ‘ethos’ and commit to doing more business with them than simply borrow their money. In addition, you will often need to be recommended or introducers to them from a trusted source.
Enness works with a number of these banks. They are fantastic to deal with and provide work solutions which cater to the client perfectly, allow for their highly specific circumstances. They are great for entrepreneurs, people who have sold businesses, those with big balance sheets but limited liquidity and so on.
Mortgage type: Residential interest-only
Rate: 1.5% over bank base rate
Term: 5 years
Special conditions: Dry mortgage without assets under management but there needs to be a wider relationship in the future.
International private banks
For the most competitive mortgage pricing for very large mortgages, especially for international buyers, Enness looks to the expansive network of international private banks – think UBS or JP Morgan – or hundreds like them.
These banks are in the market for the wealthiest of clients, with international holdings and the ability to add to their balance sheet with assets under management
In return, they provide a polished service and dedicated support. This includes access to a huge number of specialist advisers from hedge funds, lending, philanthropy, and of course, a leading interest rate and lending terms.
Mortgage type: UK unregulated mortgage for overseas residents
Rate: 1.09% over bank base rate
Assets Under Management (AUM): 40% (Min £5m if the property is used by the borrower)
Term: 5 years
Lender fee: 0.25% arrangement charge
Local building societies
At the other end of the scale, and right under everyone’s noses, is a set of local, personal, modest and highly flexible regional building societies and mutuals. These companies are sometimes restricted to their local area but they will usually lend nationwide.
These banks have often carved out niches where they excel, for example, intergenerational lending, development finance, high loan to value or foreign nationals.
Expect a slower process given the manual processes that exist, and a premium on the interest rate payable compared to the high street mega lenders. However, if you need a solution to a particular problem or a lender who will look deeply at your position and make a personal lending decision, these may well be the answers.
Mortgage type: Residential interest only
Rate: 2.49% discounted variable
Term: 5 years
Special conditions: 1% fee and restricted to UK-only
Bridging and alternative lenders
Beyond ‘prime lending’ and where more specialist circumstances exist, there is a wealth of lenders who you will only discover via an established broker or specialist.
Here there is money to be borrowed for practically any (legal) reason, so long as the loan can be secured against a property, either in the UK or internationally. The reasons to use these lenders are infinite.
Traditional bridge lending allows you to buy a property before selling another, or to raise fast cash to pay a tax bill or to invest in a business through development finance and beyond.
This is not an ‘end of the line’ market filled with people who have no other choices. In a market place where the main lenders are full to the brim with applications, clients may turn to a lender who can act fast to secure an opportunity. It’s about speed, not desperation or necessity.
They also suit those who have a property with a mortgage which has expired and their current bank will no longer extend terms to them.
This market is the most complex. It’s ultra-fragmented, unregulated, and difficult to navigate. The lenders range from private banks to newly formed challenger banks, right through to specialist funds, hedge funds and even wealthy individuals. As a result, interest rates can vary wildly.
Mortgage type: Bridging loan with rolled-up interest
Rate: 2.99% annual
Term: Up to 1 year
Special conditions: 1.00% fee
None of these examples will be found on best buy tables, mortgage comparison sites or online/free mortgage brokers – they are secret, hard to access and relationship-driven. The only way to find them is to have your fingers in the right pies or to go through a professional entity that has unhindered access to the bakery.
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