| Loan amount | £1,850,000 |
| Purchase price | £2,500,000 |
| Loan-to-value | 74% |
| Property type | Family home |
| Location | Hampstead, London (NW3) |
| Borrower | Investment banker, EUR-paid |
| Term | 25 years interest-only |
| Rate | 5-year fixed |
| Lender type | Specialist FX-income lender |
The Story
Securing a mortgage as an investment banker with foreign income, denominated in currencies such as US dollars and Euros, presents a unique set of challenges. At Fox Davidson, we specialise in navigating the intricacies of mortgage finance, empowering clients with diverse income sources to realise their homeownership dreams. In this article, we will explore how mortgage lenders can effectively incorporate foreign income and address the nuances of annual bonus payments in the assessment of mortgage affordability.
The Challenge
Foreign Income Considerations
Many professionals, including investment bankers, receive income in foreign currencies. Fox Davidson understands that the global nature of financial careers often results in income streams beyond the traditional pound sterling. To accommodate this reality, mortgage lenders can utilise current exchange rates to convert foreign income into local currency, providing a full picture of an applicant’s financial position.
Documenting Foreign Income
For investment bankers with bonus payments in foreign income, proper documentation is key. Fox Davidson advises clients to maintain detailed records of income sources, including pay slips, compensation statements, tax returns, and any relevant employment contracts. This documentation not only supports the mortgage application but also demonstrates the stability and reliability of the applicant’s income. Lenders may want to look back over 2 or 3 years to establish a reliable baseline.
The Solution
Fox Davidson’s Approach to Annual Bonus Payments
Understanding the variations in how lenders treat annual bonuses is crucial for investment bankers. Fox Davidson works closely with lenders to highlight the consistency and predictability of bonus payments. By showcasing a stable bonus history, we aim to position our clients favourably during the mortgage affordability assessment.
Currency Stability and Risk Mitigation
Given the volatility of global currency markets, mortgage lenders may consider the stability of the investment banker’s foreign income source and currency. Demonstrating a consistent income stream can enhance an applicant’s mortgage affordability profile as can being paid in a relatively stable currency such as the US dollar or Euros.
Expert Guidance for Smooth Navigation
Navigating the intricacies of mortgage affordability with foreign income requires expertise. Fox Davidson specialise in providing personalised guidance to investment bankers, ensuring a thorough understanding of their financial situation. By leveraging our extensive experience, we empower clients to present a compelling case to lenders, ultimately increasing the likelihood of mortgage approval. Fox Davidson distinguishes itself by providing access to both high street lenders and more specialist lenders and Private Banks. This multi-level approach allows us to explore a wide array of options, catering to the diverse needs and preferences of our clients.
Conclusion
For investment bankers with foreign income, securing a mortgage requires a nuanced approach. At Fox Davidson, we recognise the unique challenges associated with global financial careers and provide specialist solutions to navigate them successfully. By addressing the considerations related to foreign income, including the treatment of annual bonus payments and currency risk, we ensure that our clients can confidently pursue homeownership. Fox Davidson stands as a trusted partner, committed to unlocking opportunities and turning homeownership aspirations into reality for investment bankers with diverse and dynamic financial portfolios.
To discuss mortgages for investment bankers with one of our advisors please do get in touch.
We see a couple of EUR and USD income cases like this every month, and the pattern is always the same: the high street applies a 20% to 25% currency haircut and the numbers die, while the specialist lenders underwrite the income as it is actually earned. Do not let a lender convert your salary at a stress rate before you have spoken to a broker who knows which desks take FX income at face value. It is the haircut, not the rate, that kills these cases.
Frequently asked questions
What is a high net worth mortgage?
A high net worth (HNW) mortgage is assessed under the FCA’s high net worth rules rather than the standard affordability test. It is available to borrowers with net assets over £3 million or annual net income over £300,000. Lenders read the net assets test literally and include the equity in your main home, and on a joint application only one of you needs to meet it.
How does HNW mortgage assessment differ from a standard mortgage?
HNW assessment is whole-of-wealth based rather than income-multiple based. Lenders consider total assets, liabilities, liquidity, income, and lifestyle costs, then negotiate loan size based on the overall financial picture.
What loan sizes are available with HNW mortgages?
HNW mortgages typically start at £1 million minimum and have no upper cap. Loans of £5 million to £20 million are routine for qualifying clients. Loans above £20 million typically involve syndicated lending or relationship-driven arrangements with private banks.
How long does an HNW mortgage take to complete?
HNW mortgages typically complete in four to ten weeks. Mainstream HNW lenders are at the faster end. Private bank cases involving committee approval, complex structuring, or offshore elements can take eight to twelve weeks.
All rates and terms are indicative and subject to individual assessment, lender criteria and property valuation. Your home may be repossessed if you do not keep up repayments on a mortgage.
High net worth mortgages under the FCA high net worth definition. Private bank and specialist lender access.