You may qualify for a non-traditional mortgage that meets your specific lending needs if you have a high net worth (HNW), substantial liquid assets, or a unique income situation. These bespoke mortgage arrangements are often offered by private banks or specialty departments of global lenders. They usually have policies centered around repayment strategies and loan-to-value limits.
Custom Lending Solutions
Affluent investors often seek advice and strategies tailored to their unique needs from a Texas Loan Doctor. As a result, they have different priorities than other clients regarding investing, estate planning, and wealth transfer.
These unique needs can be challenging, especially when accessing credit. However, lending solutions for high-net-worth individuals may help you address these challenges by providing your clients with a more competitive financial environment. For example, you can offer a securities-based line of credit, which allows your clients to access liquidity without liquidating their assets or disrupting long-term investment plans.
This lending solution is based on the value of specific holdings in Raymond James brokerage accounts. Other lending solutions for HNWIs can include personal financial statements, which support loan applications by presenting a clear picture of net worth and other income sources.
Lenders require extensive documentation and stringent lending policies to approve high net worth borrower mortgage loans. This is where asset-based lending comes into play. This solution allows you to secure a loan by pledging your liquid assets as collateral. These assets include accounts receivable, inventory, and unencumbered equipment.
The lender will then evaluate the value of your assets to determine the loan amount. Asset-based lending is similar to a business line of credit in that it provides a flexible source of working capital. It can be used for various purposes, including purchasing raw materials and paying for labor.
It can also bridge the gap between cash outlays and receipts, typical for manufacturing companies that experience seasonality or significant gaps in inventory or receivables. It is also a great alternative to traditional bank lending for highly leveraged businesses or in turnaround or recovery mode.
Personal Financial Statement
A personal financial statement, also known as a net worth report, is a document that lists all your assets and liabilities. It is a snapshot of your financial status on a given date. Assets are listed at their current market value. At the same time, liabilities are accounted for as the sum of your debt balances and the present values of your future payments on loans and mortgages.
You may need to reduce the value of some assets, such as automobiles and furniture, that have little or no liquidity and can easily be replaced. It is essential to keep your financial statements up-to-date as investment balances change, interest rates fluctuate, and property values increase or decrease. They can be used to provide a snapshot of your financial health and help you get approved for loans, such as mortgages or credit cards.
This information can also help determine your tax obligations. A CPA may prepare personal financial statements following GAAP or on an OCBOA basis (a comprehensive basis of accounting other than GAAP). These reports should be prepared by a CPA who is a member in good standing of the American Institute of Certified Public Accountants.
No-Income Verification Mortgage
Securing a mortgage can be difficult if you’re a high-net-worth individual with unstable income or have significant assets tied up in real estate. You may be rejected for a loan by traditional lenders or required to make higher down payments or pay more interest rates.
A no-income verification mortgage or stated income, verified asset (SIVA) loan allows you to leverage your net worth into a home purchase without providing a W-2 or other documentation of your income. This mortgage type makes sense for gig workers, self-employed individuals, or retirees with cash reserves that can be used as qualifying income.
A government agency does not regulate these non-traditional mortgages and might lack borrower protections from conventional mortgage loans. Be sure to carefully research lenders who offer no-income verification mortgages before applying. A lender certified by the Community Development Financial Institution Fund is an excellent place to start.