Mortgage and investment portfolio

ameciar

Hi all

Would any lenders take a globally diversified stock market portfolio into consideration when applying for a mortgage?

My wife and I have a cash deposit of £150k+, no debt, good credit histories and a joint income from our jobs of approx. £120k. My research suggests that (at least pre-covid crisis) we should be able to get a mortgage of approx. 5 times our joint income (i.e. £600k).

We also have a stock market portfolio worth approx. £300k at current prices, which for a variety of reasons we don’t want to sell. Are there any lenders who take the portfolio into account and may offer us a bigger mortgage on this basis? Or more favourable conditions?

Any advice would be greatly appreciated.

Thanks!

davidmcn

There's no particular reason why a lender would be interested in the capital value of your stock market portfolio, or any other assets you have, as you're not offering the lender a security over those assets. If it produces a significant and relatively reliable income, that might be of more use, though I don't think it's something normally taken into account.

ameciar

Thanks for your response. If I were a lender, I would be more confident that someone who has significant, easily liquefiable assets would pay me back than someone who hasn't. So in that sense it doesn't strike me as outlandish that they'd consider it. And of course, the portfolio provides significant and historically very reliable income in terms of dividends.

davidmcn

If you put more of your assets into the property in question, reducing the loan-to-value percentage, that would more usefully reduce the risk to the lender.

Edi81

Lenders don't accept other security apart from the property they are granting the mortgage on.
Why don't you want to see the portfolio to get you an additional £300k of equity in the property?

Thrugelmir

ameciar said:

Thanks for your response. If I were a lender, I would be more confident that someone who has significant, easily liquefiable assets would pay me back than someone who hasn't. 

Lenders would prefer that you put that money into the property to provide more equity. Rather than place the downside risk onto them. Mortgage lending is a low margin high volume business. Lenders run mortgage books according to set criteria. No time and costly to underwrite individual mortgages on a case by case basis. 

ameciar

Thanks for your responses. We're not particularly keen to sell the portfolio for a range of reasons including capital gains tax, retaining ISA allowances, and because it's not a particularly good time to sell. Also, mortgages are very cheap so debt is quite "attractive" at the moment, if that makes sense. 
I appreciate Thrugelmir's point about lenders not wanting to assess mortgages on a case by case basis. Halifax (where we hold a significant proportion of the portfolio) recently contacted us about a more personalised service. We politely declined because we thought they'd just want to sell us things. Do you know if lenders would consider the portfolio if we signed up for this or similar services like HSBC Premier?

dunstonh

Banks are notoriously bad when it comes to investing. Expensive, poor quality own brand funds, poor software and functionality etc.   They are the last place to go with investments. 

[Deleted User]

ameciar said:

Thanks for your responses. We're not particularly keen to sell the portfolio for a range of reasons including capital gains tax, retaining ISA allowances, and because it's not a particularly good time to sell. Also, mortgages are very cheap so debt is quite "attractive" at the moment, if that makes sense. 
I appreciate Thrugelmir's point about lenders not wanting to assess mortgages on a case by case basis. Halifax (where we hold a significant proportion of the portfolio) recently contacted us about a more personalised service. We politely declined because we thought they'd just want to sell us things. Do you know if lenders would consider the portfolio if we signed up for this or similar services like HSBC Premier?

Personal Banking or Wealth Management (depends on what branding they are using now) was a thing when i worked in Halifax. The only thing they did for mortgages then was to take a charge over other financial instruments (pensions, savings, investments etc) in order to secure bridging finance. Not something that would be useful for what you are looking for.  Maybe things have changed.   I'd imagine its only got worse as there is even less profit in mortgages for them to be spending more time on a case.   

If you find someone that will get involved in something like this you can guarantee it will be a lot more expensive than a conventional mortgage.  

There are lenders that go over 5x income though. Maybe its worth exhausting those options before looking for anything more complicated.  

You can also use your investments to offset a portion of your mortgage to interest only if thats what you are looking for.   You could then invest the monthly savings if you are getting a much higher return than the mortgage is costing

ameciar

Thanks for your responses. That's very helpful and I will look into these options!