(Mortgage Solutions) One question remains: when you have a well-known client, how do you find a mortgage to match their needs?
To apply for a mortgage with us, clients need to earn a minimum of £300,000 a year and have a net worth in excess of £3m. So, as you can imagine, we’ve worked with some familiar faces from the world of show business over the years.
You might assume that such High Net Worth Individuals (HNWIs) are the Holy Grail of mortgage clients, as their net worth would easily withstand any affordability check.
This is not always the case though and while a celebrity client is an exciting prospect, they often prove to be a complex one.
Whether a client’s income originates from a Hollywood studio or a London West End theatre, the majority of actors are self-employed contract workers and even for the most sought-after future work can at times be unpredictable.
A client might be earning a substantial income on a popular television show one week, only for it to be cancelled the next.
Or they may be on the receiving end of some bad press, which in turn hinders their future earning potential overnight.
Not only might a client’s income be sporadic from one month to the next, it can also be structured in varying ways.
For example, an actor may receive an initial fee when signing a contract and then installments over the course of the project, or a performance-related bonus.
They might also collect income from other work-related sources, such as endorsements, merchandise and royalties, some of which may be in a foreign currency.
Such scenarios make projecting a client’s future income tricky and often requires a personal approach to affordability.
Lifestyles of the rich and famous
As with any other mortgage applicant, the client’s outgoings also need to be assessed.
While an average mortgage client may have childcare and the weekly food shopping to incorporate into their affordability calculation, the outgoings of high-profile clientele can be vaster and more varied.
Personal assistants, make-up artists, stylists and frequent travel will all need to be factored in, as well as any other costs associated with maintaining their lifestyle.
The lending needs of celebrity clients may be high but often their expectations are too.
They may be looking to borrow at a high loan to value (LTV) or on an interest-only basis in order to keep mortgage repayments as low as possible and maintain liquidity.
They may also wish to purchase the property through a bare trust, using a pseudonym, in order to keep their private lives private and the paparazzi at bay.
You can see why such a client might not fit well into a mainstream lender’s affordability approach. This is why private banks are typically the favoured choice for celebrity clientele, due to the bespoke and tailored approach on offer.