High net worth individuals (HNWs) struggle to get credit from high street banks, according to research commissioned by Butterfield Mortgages Limited (BML).
Nearly four out of five of the 500 HNWs surveyed said they believed banks’ criteria for lending is too rigid and 12 per cent reported being turned down for a mortgage in the past ten years.
The good news for brokers, however, was that 73 per cent of the HNWs surveyed by BLM said intermediaries had played an important role in finding specialist lenders for their needs.
BML’s research backed up the view of industry figures who have told Mortgage Solutions that brokers shouldn’t miss out on potentially lucrative work with HNWs who find it difficult to get credit from mainstream lenders.
“Tick box methods”
Sixty per cent of the HNWs surveyed said they believe it had become increasingly difficult to secure mortgages for non-primary residential purchases over the past decade. Two-thirds do not believe banks understand the needs of property investors and buy-to-let landlords.
They complained that banks used “tick box methods” which made borrowing difficult for anyone with an unusual income structure and who doesn’t have a monthly pay cheque coming into their bank account.
Forty-four per cent said they found it difficult to secure a mortgage because their capital is tied up in existing real estate investments.
HNWs also reported being turned down for smaller forms of credit – five per cent said they had been denied an overdraft and four per cent were refused a credit card.
Alpa Bhakta, chief executive at BML, said: “It may come as a surprise that of all the demographics, the UK’s wealthiest people often find themselves at an immediate disadvantage when it comes to applying for credit from banks; be it mortgages or credit cards.
“In reality, the rigid “tick box” methods applied by many conventional lenders are not compatible with HNWs’ unique and often complicated financial profiles. To overcome these challenges HNWs need to seek out brokers or lenders who can commit the necessary time and expertise to understand their situation and, in turn, deliver mortgages that meet their specific needs.”
