Private bank mortgages

Where Private Banks excel in lending is they consider the borrower's assets as a whole. The borrower could run a multi million pound business but only draw a comparatively small salary which will rule them out of the High St. Private Banks will consider the balance sheet strength of the business and investment portfolios in various forms to consider the strength of the lending case.

Private banks aren’t a premium version of the high street, they’re a specialist solution. They come into their own where borrowers have complex income, significant assets but little conventional income, or unusual properties that mainstream lenders struggle to assess. In return, borrowers will often accept lower maximum loan-to-values and rates that aren’t always as competitive as the high street because the value lies in flexibility rather than price.

Flexibility is the main factor when requiring the need of a private bank. Considerations like higher loan to value on interest only, better flexibility around RSUs and stock options, as well as a more holistic approach to underwriting.

The negatives are generally around requiring a lot more documentation due to its manual nature, and tend to be slower. Some private banks can also take weeks to 'lock in' a rate, whereas most other conventional lenders will allow you to lock in a rate on application.

Private banks are normally priced higher, but can be competitive for the right deal.

Private banks tend to earn their keep when the client does not fit neatly into a high street box. For a vanilla mortgage, rate chasing is usually sensible and the cheapest pricing is often on the high street. But for HNW clients who are asset rich and cash poor, have lumpy income, partnership drawings, carried interest, foreign currency earnings, multiple properties or a concentrated investment portfolio, manual underwriting can be invaluable. Private banks are more likely to look at the whole balance sheet, not just payslips and affordability algorithms. Rates can be competitive, but there is often a relationship premium or expectation of assets under management, so it is not always the cheapest route. Minimum loans vary, but it is generally a large-loan market and most useful for HNW or UHNW borrowers. The real value is flexibility, speed and structuring, not headline rate bragging rights.

A private bank comes into its own when the high street's models cannot see the client properly, usually a question of complexity more than wealth. The typical trigger is non-standard income, bonuses, dividends, carried interest or earnings in another currency, that a payslip-driven calculator struggles with. Sometimes there is barely a conventional income at all, just a strong balance sheet, and a private bank will lend against that where a mainstream lender cannot. They underwrite by hand and weigh the whole picture, assets and liabilities alike, rather than scoring a single number. That flexibility is the point, not the price. Rates are often bespoke and rarely the cheapest, and there is usually a minimum loan size and an expected wider relationship. It is a myth that these are only for the ultra-wealthy. The real test is whether a case is complex enough to need a human to structure it, which increasingly includes affluent professionals whose income does not fit a standard box.

Private Banks provide an essential service to HNW borrowers with complex incomes and asset bases often in several jurisdictions.

The starting point tends to be £1m upwards with loans £3m+ receiving extra special underwriting treatment.

Private Banks prefer borrowers to whom they can offer wealth services as well as assets under management. Often they do not want to lend just on the mortgage. There has to be a bigger picture to support a long term relationship.

Processing is manual and a client interview is often done. Rates are not mainstream but lots of flexibility on fees and criteria as HNW and high incomes exempt them from FCA rules.

A private bank is not where I send a weak mortgage case; it is where a strong client has a financial life that does not fit a high-street scorecard. That may be an entrepreneur, partner, executive with bonuses or carried interest, an international client, or someone buying a high-value or unusual property.

The difference is judgement. High-street lenders usually need income to fit policy; private banks can assess the wider balance sheet, liquidity, assets and long-term relationship. That can make them far better for complex income, large interest-only loans or deals needing speed and bespoke structuring.

The rates are not automatically higher. They can compete with the high street, although some clients pay a premium for flexibility. Coutts currently says new-client borrowing should exceed £1.5 million, so this is specialist territory, but not exclusively for billionaires. The value is not the badge; it is getting a sensible “yes” where an automated system sees only exceptions.

Whether you need to use a private bank or not typically comes down to the size of the mortgage required and the complexity of the deal. It also depends on whether borrowers are rich enough to meet the private banks' often strict qualification criteria. Coutts recently increased the minimum mortgage loan size to £3 million when applicants apply directly to the bank, and other lenders want borrowers to earn at least £300,000 a year to qualify. Private banks are useful for overseas clients with multiple income sources and those requiring a bank to work out affordability based on income from investment portfolios. They also help with unusual homes. Some private banks can provide £2 million+ mortgages with a 5% or 10% deposit, which is something hard to get from standard lenders. If you are looking for a larger mortgage and you want the cheapest rates, then they are normally available through the high street lenders. There is often a 1% premium or more to use a private bank.