Large Loan Mortgages
Large Loan Mortgages – how to find a competitive deal
Getting a high value mortgage can sometimes be a challenge, as many mainstream lenders set upper limits on the amount people can borrow. These often apply even though you have a sufficiently high income to justify the loan.
Assured is here to help you find willing lenders and a competitive deal.
What is a Large Loan Mortgage?
Mortgage lenders often consider any borrowing over £500,000 as a large mortgage loan, although each lender sets their own maximum loan amount.
Often the maximum loan amount changes depending on the Loan to Value. For example, one lender might allow you to borrow £850,000 on an 85% Loan to Value (LTV) – meaning that you put down a 15% deposit. Meanwhile, if you can only contribute 10%, putting the LTV up to 90%, you may only be able to borrow £600,000.
As a rule, high street lenders feel that lower value mortgages are safer than high value ones, because they are less exposed financially if a borrower defaults on the loan. It can therefore prove relatively difficult to borrow £1m or more.
How do I know if I can afford a large mortgage loan?
Generally you won’t be able to get a large mortgage if a lender is concerned about your ability to repay it. Providers have to gauge affordability as part of the mortgage application process.
The rule of thumb is that you can usually borrow around 4-5 times your income, and this applies to large mortgage amounts too.
Lenders can decline High Net Worth individuals for a mortgage, however, if they can’t demonstrate a steady income. Often, too, people who receive large annual bonuses find that these are not accepted as income.
To understand how likely you might be to get a large mortgage loan, get mortgage advice before you start looking for property. A key consideration is the size of the repayments on your mortgage, and whether these are comfortably manageable.
Large Mortgage Loans and High Loan to Value
As we saw above, having a large deposit makes it easier to get a large mortgage loan. The minimum deposit for a high value mortgage is usually 90% and the mainstream lenders may cap a 90% loan at around £600,000.
If you are looking to borrow more than this, with a 10% deposit or less, you are likely to need to approach specialist lenders or private banks. Many of these are only accessible via a professional Mortgage Broker.
These lenders will often take a bespoke approach to your mortgage and underwrite a loan tailored to your specific situation.
Large Mortgages for Directors of Limited Companies
The main challenge for Limited Company Directors is to find a lender that understands how business works. Many company directors take a lower salary and leave net profits in the business, to reduce tax liabilities.
But from a mortgage point of view, this can mean that your net worth is grossly underestimated – which limits your borrowing power. For a company director looking for a high mortgage amount, you will often need to find a specialist or private lender.
What are the risks of a High Mortgage Loan?
The risks of a High Mortgage Loan, whether it’s a residential loan or a buy to let mortgage, are the same as with any debt secured on property. These include:
- Losing the home due to falling behind with mortgage repayments
- Interest rate rises make your monthly repayments unmanageable
- A fall in property prices puts you into negative equity
- Changes in your circumstances make repayments too costly
A further, general risk with high value property is that it is more difficult to sell, which can cause issues if you need to move home quickly.
How do I get a Large Mortgage Loan?
It’s usually more complex to find a large mortgage than a standard loan. It is therefore highly advisable to speak to a Mortgage Broker.
A broker will explore the specifics of your situation and explore the UK mortgage market to find you suitable deals. We will assess the lending criteria, fees and rates to recommend the most appropriate solutions.
At Assured we support high net worth clients and people with complex financial situations to find suitable mortgages. Assured Mortgage Solutions Limited is authorised and regulated by the Financial Conduct Authority.