High net worth mortgage rates

High net worth mortgage rates are usually set for each case rather than taken from a published list. Lenders look at the loan size, loan-to-value, the borrower's income and assets, the structure and the wider relationship, then agree a rate. Many large loan products track a reference rate with a margin added.

Because pricing is individual, two borrowers asking for the same loan can be offered different terms. A borrower with a strong balance sheet, a low loan-to-value and a simple case may be offered a lower margin than one with complex income or a higher loan-to-value.

Large mortgage rates can be fixed, tracker or discounted, as with standard mortgages. Some lenders offer bespoke fixed periods or rates linked to a different currency for borrowers with overseas income.

The main drivers of the rate on a large loan are the loan-to-value, the loan size, the structure and the risk the lender sees in the case. A lower loan-to-value usually means a lower rate. Interest-only, unusual properties, overseas income and complex ownership can all add to the margin a lender asks for.

The term of any fixed period, the size of the arrangement fee and whether there are early repayment charges also affect pricing. A lender may offer a lower rate in exchange for a higher fee, or the reverse, so offers should be compared on their total cost over the period that matters to the borrower.

Market conditions affect every lender, so rates on large loans move with the wider market over time.

Private bank mortgage rates are often linked to the wider relationship. A bank may offer a lower margin to clients who hold investments or deposits with it, or make holding a set level of assets a condition of the rate. The rate may be reviewed if those assets later fall below the agreed level.

This means a private bank's headline rate cannot always be compared directly with a specialist lender's. Borrowers should look at the cost of any assets they would need to move, including fees for investment management, as well as the mortgage rate itself.

How private banks work, and what they typically ask for, is explained in the guide to private bank mortgages.

Fees on a high net worth mortgage can make a large difference to the total cost. The main ones are the lender's arrangement fee, valuation fees, legal fees for both sides and any broker fee. On large loans, a percentage arrangement fee can be a significant sum, so it should be weighed against the rate it buys.

Early repayment charges and the cost of switching at the end of a deal also matter. A borrower who expects to sell or refinance within a few years may prefer a shorter fixed period or a tracker with lower exit costs, even at a slightly higher rate.

Lender and broker quotes can be compared once the case is ready. The wider high net worth market is covered in the guide to high net worth mortgages.