A practical guide to private bank mortgages.
A private bank mortgage is not simply a larger version of a high street loan. It is a relationship-driven lending facility designed for clients with complex income, substantial assets or cross-border financial structures.
Private banks do not focus solely on payslips and income multiples. They assess overall wealth, asset strength, liquidity, reputation and long-term banking alignment. In return, they often provide flexibility that mainstream lenders cannot.
This guide explains how Pavilion approach private bank mortgages strategically and realistically.
1. What is a private bank mortgage?
Private banks serve Pavilion’s high-net-worth and ultra-high-net-worth individuals. Their mortgage offering typically forms part of a broader banking relationship that may include:
Investment management
Liquidity facilities
Foreign exchange
Lending against assets
Corporate banking
Unlike many retail banks, private banks can assess:
Complex bonus structures
Carried interest
Partnership income
Global asset portfolios
Trust or foundation structures
Institutions such as Coutts, HSBC Private Banking, Investec and Arbuthnot Latham operate within this space, each with its own appetite and structuring style.
2. Who typically uses private bank mortgages?
Private bank lending is particularly suited to:
Senior executives with large, variable bonuses
Partners in law, accountancy or investment firms
Entrepreneurs with liquidity events pending
Clients with international income or generational wealth
Borrowers with significant investment portfolios
High-value prime and super-prime property purchasers
Where high street lenders struggle with complexity or income volatility, private banks often step back and assess the broader financial picture.
The emphasis shifts from “Can this income support the loan?” to “Does the client’s overall wealth comfortably support this exposure?”
3. Relationship is central.
Private banking is built on relationship.
In most cases, mortgage pricing and flexibility are influenced by:
Assets under management (AUM)
Cash deposits held with the bank
Investment mandates
Long-term engagement
Some banks require a minimum AUM threshold or overall “relationship size” before offering full private banking services.
Private bank mortgages are rarely isolated transactions; they sit within the wider banking ecosystem.
4. How affordability is assessed.
Private banks typically take a more holistic underwriting approach.
Rather than strict income multiples, they may consider:
Average bonus over multiple years
Deferred compensation
Carried interest schedules
Investment income
Liquidity coverage
For example:
A partner in a law firm with fluctuating drawings may be assessed on multi-year average profitability.
An investment professional with significant RSUs or carried interest may have forward vesting schedules factored into affordability.
An investor with a significant portfolio may have potential earnings from liquid assets treated like income in their affordability calculation.
Some private banks also offer:
Lombard lending (borrowing against investment portfolios)
Asset finance (luxury vehicles, metals, artwork or jewellery)
Hybrid structures combining asset-backed and property-backed lending
This flexibility is typically unavailable in retail lending.
5. Loan-to-value (LTV) and security.
Private bank LTVs vary depending on:
Property type
Location
Client profile
Broader asset backing
Typical LTV ranges may include:
60–75% LTV on prime residential
Higher leverage if cross-collateralised with other assets
For ultra-prime London property, appetite may be strong, provided overall leverage remains conservative.
Private banks may also accept:
Complex ownership structures
Trust-held properties
Offshore company ownership
However, transparency is paramount.
6. Cross-border lending.
One area where Pavilion find that private banks excel is international structuring.
They are often comfortable with:
Multi-currency income
International tax residency
Offshore trusts
Foreign asset holdings
Dual or non-domiciled status
Currency flexibility may include:
Sterling mortgages
Multi-currency lending
FX risk management
This makes private banking particularly attractive to globally mobile clients.
7. Interest rates and structure
Private bank mortgage pricing is often:
Relationship-dependent
Margin-based (e.g. Bank Rate + margin)
Negotiable within parameters
Rather than headline 2-year or 5-year fixed products, structures may include:
Floating rates
Bespoke fixed terms
Bullet repayments
Interest-only structures
Interest-only is common within private banking, particularly where:
Asset growth exceeds borrowing cost
Liquidity events are expected
Portfolio leverage is strategically managed
Flexibility can include:
Early repayment without penalty
Drawdown facilities
Revolving credit elements
But rates are not always the cheapest in the market. The value lies in flexibility and structure, not headline cost.
8. Documentation and transparency.
Despite flexibility, documentation standards are rigorous.
Expect to provide:
Detailed asset and liability statements
Investment portfolio summaries
Trust documentation (if applicable)
Company accounts
Tax residency confirmation
Private banks conduct deep due diligence, particularly around source of wealth.
Clarity and transparency accelerate approval; opaque structures slow it down.
9. Liquidity events and entrepreneurial borrowers.
Entrepreneurs often turn to private banks where:
A business sale is pending
Liquidity is expected but not yet realised
Income is volatile but net worth is substantial
In some cases, a private bank may lend based on:
Expected sale proceeds
Signed term sheets
Structured exit agreements
This forward-looking underwriting can provide flexibility unavailable through mainstream channels.
However, private banks will typically require strong evidence of certainty before lending against future events.
10. Property type and value.
Private banks are comfortable lending on:
Prime London property
High-value country estates
Unique or architect-designed homes
Mixed-use prime assets
Where high street lenders may restrict exposure, private banks often view property within a broader wealth framework.
For prime London markets in areas such as London, appetite remains strong, particularly where overall leverage is modest relative to wealth.
11. Risks and considerations.
Private bank mortgages are not universally appropriate.
Consider:
Relationship expectations (AUM & banking requirements)
Potential pressure to move investments
Margin call risk in asset-backed structures
Floating rate exposure
Borrowing against investment portfolios introduces market risk. If asset values fall materially, additional security may be required.
Understanding these dynamics is critical.
12. When a private bank makes sense.
Pavilion find that a private bank mortgage is often suitable where:
Income is complex or heavily bonus-driven
Net worth far exceeds annual income
Cross-border structuring is involved
Property value exceeds mainstream lender caps
Flexibility is more important than lowest rate
It is less appropriate where:
Income is simple and stable
Borrowing is modest
No broader relationship is desired
In those cases, high street, niche or specialist lenders may be more cost-effective.
Final thoughts.
A private bank mortgage is less about ticking criteria boxes and more about aligning lending with overall wealth strategy.
It offers Pavilion’s clients flexibility, discretion and structural breadth, particularly for complex, high-value or internationally structured clients. But it sits within a relationship framework that extends beyond the mortgage itself.
Approached strategically, private bank lending can provide tailored solutions that reflect the depth and nuance of a client’s financial position.
As with all sophisticated financial tools, the key is clarity: clarity of structure, clarity of assets and clarity of long-term intent.