Large Mortgage Loans

What is a large mortgage loan?

A large mortgage loan is typically considered to be one that starts at £1 million. Lenders vary, however, so some offer large mortgage loans starting at £500,000, for example. When borrowing via a high-street lender, you can usually borrow up to £5 million although some lenders offer higher maximum loans, such as £10 million. With specialist lenders and private banks, however, these loans can extend into several millions of pounds. Some don’t set any upper limit for the large mortgage loans they offer.

Why use a large mortgage loan?

As a high earner, you may have the cash to buy a property outright but this doesn’t necessarily make the most financial sense. By using a large mortgage loan, you can maintain your liquidity and take advantage of other investment opportunities that may arise. Alternatively, you may have limited capital to make an outright purchase of a high-value property but have substantial assets. This is when obtaining a large mortgage loan through a private bank or specialist lender makes perfect sense.

The challenges faced with large mortgage loan applications

As mentioned above, arranging a large mortgage loan can be challenging. One reason for this is that not all high-street lenders offer this type of loan. Those who do offer them only provide limited loan amounts and tend to follow a set mortgage application process. This brings you to a second challenge, which is your complex income structure as a high net worth individual.

Your income is likely to be irregular and you may be paid in bonuses, commissions, share dividends or foreign currencies. High-street lenders prefer you to have a steady income as this reduces their level of risk. Trying to navigate your complex income stream with a high-street lender can, therefore, often be time-consuming and frustrating. You may also have a complicated ownership structure, such as a limited company, a foundation or a trust. When it comes to assessing your suitability for a large mortgage loan, private banks and specialist lenders take a more holistic approach. They assess each case on an individual basis so you can rest assured that you’ll benefit from the best financing solution for your unique situation and needs. You’ll also benefit from a better rate when using a niche lender rather than a high-street lender.

Some lenders also favour certain industries, making them more willing to offer a large mortgage loan if you work in one of their preferred sectors as opposed to one that they consider to be volatile. Other lenders set age restrictions and some have preferences when it comes to which countries they consider acceptable for income received in foreign currencies. Our mortgage brokers are well-versed in handling these issues. They know which lenders have certain preferences and will approach the right one on your behalf accordingly.

How does a large mortgage loan work?

Large mortgage loans can be taken out on an interest-only or repayment basis. They are suitable for residential and buy-to-let investments and you can also take advantage of a large commercial mortgage. With niche lenders, your situation is taken into account, no matter how complicated it may be, such as being self-employed, a first-time buyer, an expat or a foreign national. Non-standard properties are also accepted. Solutions are provided whatever your requirements, such as needing an offshore mortgage or a limited company mortgage. Your assets can also be taken into account, such as a stock portfolio, a personal pension and any overseas assets you may have. Flexibility can be provided for how you make your mortgage payments. For example, if you receive annual bonuses, the lender may allow you to make annual payments for your mortgage instead of monthly payments.

Use an expert broker to apply for a large mortgage loan

It’s best to avoid approaching lenders direct for large mortgage loans in London, Kent and Edinburgh. This is because these high-value loans are complicated to arrange and if you’re turned down by a lender, a mark will be left on your credit report. Instead, use the services of our large mortgage loan brokers to approach the right lender on your behalf and benefit from a successful application. Many specialist lenders and private banks only deal with intermediaries rather than direct with borrowers. This means that you’ll have access to a wider pool of lenders and products when our mortgage brokers act on your behalf. When you’re ready to apply for a large mortgage loan, just give us a call on 01322 907 000.

At Trinity Finance, we also offer a range of financial services in addition to mortgages. These include personal and property insurance as well as estate planning services. For more information and to put financial protection in place for you, your property and your loved ones, get in touch with us on the number above or send an email to us at info@trinityfinance.co.uk. Alternatively, send an enquiry to us via our contact form. One of our mortgage and protection brokers will reply to you as quickly as possible with further details.

How much can you borrow with a large mortgage loan?

Various factors affect how much you can borrow when applying for a large mortgage loan. These include your income, any assets you have, the size of your deposit and the LTV that a lender is prepared to offer you.

Your income

As with any mortgage, lenders need to check your affordability for a large mortgage loan. They need to ensure that you can maintain your mortgage payments throughout the term. As well as your income and assets, your expenditure and outstanding debts are also included in the affordability assessment.

If you’re a high net worth individual, you’re defined as someone who has an annual income of at least £300,000 or you have net assets of at least £3 million. As such, a niche lender will tailor a solution to your borrowing needs. If you’re not classed as a high net worth individual but require a large mortgage loan, your affordability is usually assessed using an income multiplier although other factors are considered too.

Typically, mainstream lenders use an income multiplier of 4.5 or 5 times your salary if you’re employed. If you’re a director of a limited company, your salary and dividends are taken into account. If you’re a sole trader or in a partnership, the net profit is looked at. When it comes to applying for a mortgage loan as a high net worth individual, however, some lenders use higher income multipliers, such as 6 times your income. Whatever your income situation, specialist lenders and private banks take a more flexible approach, looking at your overall wealth.

Your deposit

As with any mortgage, the more you can pay for your deposit, the more favourably a lender will look at your application. This is because a higher deposit reduces the lender’s risk, which is especially important when taking out a large loan on a single high-value property. A higher deposit reduces the loan-to-value ratio needed, resulting in better rates. As well as that, if you have a larger deposit, some lenders offer more flexibility with the application requirements. For example, you may not need to provide as much paperwork or the income requirements may be lowered.

The loan-to-value (LTV) ratio

Lenders differ on the LTVs they offer for large mortgage loans. High-street lenders tend to offer LTVs up to a maximum of 85% whereas private banks and specialist lenders are more flexible. As well as offering higher LTVs, niche lenders consider using your assets as security, which is known as cross-charging. When additional security is provided, some lenders offer 100% large mortgage loans.

Generally, when it comes to the amount a lender will be prepared to lend you, this will be higher the more deposit you can pay. This is because their risk will be reduced. For example, with a 90% LTV, you may be offered a loan of £500,000. With an 80% LTV, the same lender may offer an increased loan amount of £800,000. If the LTV is lowered to 75%, they may offer you £1 million.

How to increase your borrowing potential

To improve your chances of a successful mortgage application and to maximise your borrowing potential, there are some steps you can take. All of these lower the level of risk for the lender so that they’ll look more favourably on your application.

• Put down a 40% deposit. An LTV of 60% or less is usually one of the lowest thresholds offered by lenders. You’ll be considered a much lower risk to lenders and as such, you’ll benefit from the best interest rates.
• Provide as much information about your income and assets as possible. Aside from your salary, be sure to include any additional income you receive. For example, bonuses, commissions or income that’s paid in foreign currencies. As well as that, give details of any assets you own.
• Reduce any outstanding debts. Try to clear as much as you can of any outstanding debts. This shows lenders that you can manage your finances and helps with the affordability assessment for your mortgage loan.
• Check your credit history. A good credit history shows lenders that you are reliable when it comes to paying your bills. They can see that you always make payments on time and in full, reassuring them that you’ll keep up with your mortgage payments.
• Consider a joint mortgage. Another option is to take out a joint mortgage. In this case, both of your incomes would be taken into account, increasing the amount you can borrow. You can also pool your savings to put down a bigger deposit. This means that you can have a lower LTV and benefit from better rates.

What are assets under management and dry lending?

Large mortgage lenders offer these loans on a different basis — either using assets under management or dry lending.

Assets under management 

Traditionally, private banks have always preferred to form long-term relationships with borrowers rather than provide one-off loans. Therefore, when you’re looking to secure a large mortgage loan of £1 million or more, a private bank will usually ask to hold a certain level of your investments and other assets to manage. This can be your portfolio of stocks and shares, for example, and this arrangement is called assets under management (AUM).

The assets required may be for a specific value or a percentage of the loan you wish to arrange. Most private banks request assets under management for 25% of the loan’s value. For example, if you wanted to borrow £1.5 million, you’d need to lodge assets worth £375,000 with the bank. You’ll generally benefit from a higher income multiplier being used or a higher LTV being offered by the private bank. This is because managing your assets gives them more security when offering you a high-value mortgage loan.

Dry lending

As large mortgage loans have increased in popularity, the market has grown more competitive. This has resulted in both mainstream and specialist lenders offering alternative arrangements that don’t include holding assets under management. Known as dry lending, this is the same way that standard mortgages are arranged. Instead of placing your assets under management, the loan is secured against the property you want the mortgage loan for. As a high net worth individual, your overall wealth is looked at, including your income and assets, which can be held anywhere. With this change in the market, private banks have had to become more flexible with their lending options too and now offer dry lending more commonly.

Benefit from our extensive expertise with large mortgage loans

Our specialist mortgage brokers – located in Kent, London and Edinburgh – have extensive experience when it comes to handling large mortgage loans. They understand lenders’ concerns when it comes to the risk of lending such a high loan amount for one property as well as your concerns for being able to secure a large mortgage with your complex financial situation. Your dedicated broker will carry out a thorough assessment of your finances and take the time to fully understand your borrowing needs. No matter how complicated your circumstances or requirements, your large mortgage loan application will be tailored and presented to the niche lender most likely to approve it. As well as that, your dedicated broker will negotiate for the most flexible terms and favourable rates on your behalf. By using our services in this way, you’ll benefit from saving time, money and stress while we deal with the complexities on your behalf.

At Trinity Finance, we understand that flexibility is key not only as far as your property purchase or remortgage is concerned but also when it comes to your time. Our mortgage brokers will be sympathetic to your time constraints and, as such, are contactable by different means, with availability to suit your schedule. We provide a discreet and responsive service along with a bespoke solution to your borrowing needs. For an initial enquiry, contact us on 01322 907 000 or by email at info@trinityfinance.co.uk. If you prefer, send your details to us via our contact form. One of our mortgage consultants will reply to you with more information, including direct contact details and the methods available for appointments.