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The Financial Conduct Authority (FCA) defines a high net worth individual as someone with an annual net income of no less than £300,000 or with net assets of no less than £3,000,000. These net assets can include residential property and, consequently, there are many people who may be considered as high net worth on paper, but who find it difficult to access their capital wealth.
Second charge loans up to 80% loan to value can now provided for any purpose to customers who qualify as high net worth, enabling them to access this capital.
Loans are available with terms of 1 year to 5 years, with no maximum age and maximum loan sizes of around £10 million. As cases are individually underwritten, a flexible approach to income is taken and expats, foreign nationals and non-domiciles can be considered
Importantly, loans provide customers with the choice to roll up some or all interest for payment on redemption of the loan, and this can provide an important way of managing cashflow for individuals whose wealth is locked up with their assets.
It’s not just individuals who meet the high net worth definition through their asset wealth who can benefit from this approach. A sum of £150,000 was advanced to a customer who qualified for high net worth status through a significant net income of nearly £500,000 a year.
This individual lived in a property worth £1.5 million, with an outstanding first charge mortgage of just over £750,000 and wanted to borrow the money to pay a tax bill. They were able to provide a credible strategy regarding repayment of the loan, and so the lender advanced the loan on a two year term, with interest rolled up and payable at the end of the term. This helped the customer to raise a large sum to pay a tax bill whilst also managing their cashflow.
If you are interested in releasing equity from residential property to with a high net worth loan, please complete the contact form below and we will be happy to help.
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