Afin’s HNW proposition is designed to make complex financial circumstances more straightforward when getting a mortgage

The FCA defines a high-net-worth customer as someone with an annual income of at least £300,000 or net assets of £3 million and above.¹ That probably sounds like just a handful of super-rich people, but you might be surprised how many clients could fall into that category.

The HMRC estimates that there were around 170,000 taxpayers earning £300,000 or more in 2023². And while it is harder to find figures for net assets, ONS data estimates that the wealthiest 1% of UK households, roughly 282,000 households, had wealth of at least £3,121,500 in the period April 2020 to March 2022.³

This may conjure up an image of a “high-net-worth” individual and their ability to buy a house or fund other parts of their life, such as a business or property investment for example. But that image does not always match up with the reality of a hardworking, successful borrower who has accumulated significant wealth – particularly in assets – but does not to meet the traditional income-based affordability rules of a mainstream lender.

At Afin we call these people “asset rich, income light”, and it is for borrowers like this that we have introduced our High-Net-Worth mortgage. In very simple terms Afin’s HNW mortgage looks at a client’s overall asset bases, including both liquid and illiquid assets, to determine their affordability instead of purely focusing on income checks.

These assets could include personal and business properties and real estate holdings, pensions, investments and shares, including ISAs. In certain cases the total net assets could also include physical items such as fine art and classic cars.

Unlike private banks, Afin does not require a client to have assets under management with us to become a mortgage customer, and our personal approach to underwriting means we will consider a broader range of assets and more complex wealth structures than many other lenders.

What kind of client would an Afin HNW mortgage suit?

The Company Director

Take the owner manager who has spent over 20 years building a profitable business but only draws a relatively modest £100k annual salary, ploughing the rest of the profits back into the firm. However, they also hold £9 million worth of commercial and residential investment properties and land.

For a £2 million interest only mortgage on a five-year term, an annual £100k salary would not be sufficient using traditional income-based affordability calculations. Instead Afin can use certain assets within the property and land investment portfolio to support affordability.

For example, using a £5 million chunk of the property portfolio at 50% of the value would give a proxy income of almost £21,000 a month for 120 months, before committed outgoings, sufficient for the five-year mortgage.

This means the £2 million mortgage could be serviced based on the overall wealth of the customer.

The International Executive

Another example would be a French executive who has recently relocated to the UK with their family to lead a European business for at least five years and wants to buy a home while they are here. They need a £1 million interest only mortgage over a five-year term for a £1.5 million property, using a £500k relocation allowance as deposit.

They earn £120k in the UK and €30k back home in France, so affordability is tight based solely on their UK income, plus they have no UK credit history and are employed on a contract, making this quite a complex case for many lenders.

But Afin can leverage our experience of supporting people from overseas working in the UK, alongside our HNW proposition.

In addition to their UK income, the Executive also has an unencumbered French Villa worth €2 million and a verified global investment portfolio of €3 million. We can apply our internal methodology to use 80% of the €3 million portfolio, worth the equivalent of £2.1 million, to support affordability. We can also use 80% of the €30,000 salary as foreign income of £21,000 per year.

This gives a net sterling wealth position that support the borrower’s affordability for the £1 million mortgage.

A purely domestic underwriting lens would struggle to provide a solution but looking at the full global picture shows that the client is sufficiently wealthy enough to service the mortgage on both an income and asset-based basis, without having to move their investment portfolio to Afin.

How can we help?

These are just two examples of how Afin’s High-Net-Worth mortgage could help borrowers where other mainstream lenders may struggle, but there are plenty more scenarios, including retired borrowers.

Just ask us!

Our mortgages can be used for first-time-buyers, movers and remortgages. Borrowers may also be able to release funds from their existing property to help towards things such as property or business investment, or paying education fees, subject to eligibility and underwriting.

Loan amounts range from £250,000 to £3.5 million, with LTV up to 70% for loans over £1 million, and loan terms from two to 40 years. Mortgages are available as interest-only and repayment options, with fixed and variable rates.

Being “high-net-worth” is not always as straightforward as the FCA definition may suggest when it comes to people’s incomes, while wealth management is also becoming ever more complex. That’s why Afin’s High-Net-Worth is a bespoke mortgage solution designed for people whose financial profiles don’t always fit conventional models.

As we like to say, “It’s lending that recognises your worth.”

For more information or to discuss a case, contact Tippie on tippie.malgwi@afinbank.com or 07353 963884

¹ FCA Handbook – high net worth mortgage customer
² Personal Incomes Statistics 2022 to 2023: Commentary – GOV.UK
³ Wealth in Great Britain report