People are often surprised to find that High Net Worth (HNW) and affluent clients struggle to access credit. Between ten and twenty percent of HNW in the United Kingdom struggle with access to loans. The main drivers behind this are irregular income, lack of credit, and bank regulations. Wealth often comes from assets and businesses, not income, which is often the main measure used by high street banks. For this reason, traditional lending and fast lending like Property Bridging, is often not available to HNW and affluent clients. On top of this, as clients, they expect high levels of service so dedicated lenders and brokers have emerged to meet the bridging needs of the wealthy.
Starting at the beginning, with the brokers, in order to work with their clients, many maintain offices in desirable locations such as Mayfair, City of London, Oxford. They also maintain staff with experience and a focus on providing high levels of customer service. This is not simply a matter of responding quickly to emails or always having a phone handy but a broker must be able to understand their client’s complex portfolio not only of properties, but also how to truly measure their wealth. Most property lending requires affordability checks, and is often up to the broker to demonstrate a client has the means to repay a loan. While this is standard for all bridging loans, in cases where a client keeps most of their money in a stock portfolio or reinvests it in their business, it is often difficult to clearly demonstrate liquid wealth. The broker must be able to explain to the lender both their client’s needs and their ability to repay the money they borrow.
The lender, like the brokers, must be able to understand similar structures. For instance, if a client holds their wealth in a private company, then a lender must be able to get comfort with this structure in order not to hold up the process overall. One of the key ways this can be done, is by offering direct access between the underwriting team and brokers. This enables the lender to understand a client’s needs and financial profile quickly, and get any questions answered as soon as possible to keep thing moving. Once a lender has established comfort with the client and their property, then the lending offer must also fit the client’s needs.
HNW and affluent clients often require larger loan amounts than average loans – the average mortgage size for properties valued between £1,000,000 and £2,000,000 is over £400,000 – compared with a UK average of £85,000. This means that the lender needs to be able fund large loan amounts quickly and frequently. Borro has seen many cases where a lender decides at the last minute that they are uncomfortable with the size of loan requested and the client’s financial profile. Providing high loan amounts to clients with irregular credit simply isn’t for everyone.
Finally, a lender needs to be able to provide flexibility even if their initial solution is not enough for the client. This is where Borro comes into its element. Our luxury asset bridging loans make it simple for clients to top up borrowing, especially for HNW and affluent clients, who may hold sizeable amounts of wealth in luxury assets and property. We allow clients who are unable to get all the money they need from their property to borrow against another asset in their portfolio. This ensures clients have the smoothest experience possible and allows Borro to provide a solution even in the most complex cases.