High-net-worth individuals are struggling to secure credit from high street banks, with one in nine turned down for a mortgage in the past decade and 5 per cent denied an overdraft, according to recent research released by Butterfield Mortgages Limited (BML).
Most HNWIs surveyed by the prime property mortgage provider find the process of applying for a mortgage too rigid, with 79 per cent saying that criteria set by finance providers apply “tick box” methods that fail to recognise unique personal circumstances.
Complicated financial profiles
Complicated financial profiles are one of the main challenges for HNWIs when securing credit, with capital spread between a number of different assets, including liquid assets and property, according to the recent research from BML. Of the over 500 individuals who participated in the survey, 44 per cent said they found it difficult to access credit due to their capital being tied up in existing real estate investments.
Also, 38 percent struggle to get mortgages from banks because they do not have standard monthly pay cheques that many providers require as part of their lending criteria. Some 60 per cent also believe it is becoming increasingly difficult to secure a mortgage for a non-primary residential purchase, according to the recent research from BML.
Investors lose confidence
In response, 67 per cent of UK HNWIs have lost confidence in high street banks, feeling they do not cater to the needs of property investors and buy-to-let landlords. In response to these challenges, the vast majority (73 per cent) of wealthy individuals now rely on brokers to help them find lenders that can offer them finance for their specific circumstances.
Alpa Bhakta, CEO at BML, commented: “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 HNWIs’ unique and often complicated financial profiles. To overcome these challenges, HNWIs 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.”
Butterfield Mortgages Limited (BML) has commissioned an independent survey among more than 500 HNWIIs to uncover the difficulties they face when applying for credit.