High net worth individuals (HNWIs) are struggling to successfully apply for a mortgage, research by Butterfield Mortgages Limited (BML) has revealed.
 
According to a new study, 18% of surveyed HNWIs have been turned down for a mortgage in the past decade, representing a 6% climb when compared to the results of a similar survey commissioned by BML in Q1 2019.

The latest findings from the prime property mortgage provider were based on a survey of 2,008 UK adults and included those with a combined investment portfolio of over £100,000.

BML revealed that of the HNWIs who had applied for a mortgage in the last 10 years, either successfully or unsuccessfully, 51% have been rejected at some point. 

In terms of the reasons for these rejections, 63% of those surveyed said they have struggled to get a loan in the past decade due to their complicated income structures or lack of monthly pay cheques – which compares to the national average of 42%.
 
The findings also showed that 35% of UK adults who have applied for a mortgage in the last 10 years said they have had to wait three months or longer to hear if their applications were successful. This figure jumped to 58% for those with investments worth over £100,000.

“As a general rule of thumb, the wealthier individuals are, the more complex their finances are likely to be,” BML CEO, Alpa Bhakta, commented. “COVID-19 has only exacerbated the challenges of applying for a mortgage, meaning that many mainstream providers and big banks are simply not equipped to take on complex cases at the moment.”

The research also suggested that HNWI’s experiences are not just limited to mortgages. When it comes to other forms of credit, 17% of HNWIs have been turned down for an overdraft since 2011, and the same number (17%) have also been rejected for a credit card in that period.

“The credit struggles of the UK’s wealthiest may come as a surprise, but as today’s research shows, their ability to access and arrange financing is by no means guaranteed,” Bhakta said. “This is a long-term challenge, and as a result of their frustrations, high street banks are facing a loss in confidence from high net worth individuals. 

“Rather than engaging with financial service firms who rely on rigid application processes, I expect more HNWIs to seek out brokers and lenders who specialise in dealing with the needs of wealthy and ultra-wealthy individuals. Doing so will reduce the chances of dealing with a lender who is not equipped to manage their unique circumstances.”

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