Large Loan Mortgages – why seek advice?
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Large Loan Mortgages - why seek advice?
Borrowing more than £1 million for a home is more common than you might think – and in fact, many of the high street banks generally lend up to £5 million as standard. The main focus in getting a large loan is proving that it is affordable to you.
What is a Large Loan Mortgage?
Generally, the mortgage market considers a large loan to be anything over £1 million. With any mortgage, lenders are focused on the risk that they are taking on with each customer.
With a large loan mortgage, the risk is clearly greater than for a customer borrowing £150,000, so you can expect robust affordability checks and sometimes higher interest rates. Getting a good deal can save you thousands, so it’s more important than ever to seek mortgage advice on a large loan.
How do I know if I can afford a large mortgage loan?
Mortgages are only awarded to those who can afford them – there are strict regulations around this in the UK. As part of any mortgage application you will need to evidence your income, your outgoings and your credit record.
This is very important as your home may be repossessed if you cannot meet the repayments. Generally, though, repayments will be lower and you can access better rates if you can put down a larger deposit.
Large Mortgage Loans and High Loan to Value
While standard mortgages in the UK will let you borrow 95% of the value of a property, this Loan to Value ratio is generally lower for a large mortgage loan.
Most lenders will want a 15% deposit – or 85% Loan to Value – on a property worth more than a million. On a £2 million property, a 15% deposit will total £300,000.
You may find more generous Loan to Value ratios with private banks and specialist lenders. These often take a bespoke approach and will underwrite a mortgage to suit your specific circumstances.
Large Mortgages for Directors of Limited Companies
Limited company directors are often concerned about it being more complex for them to borrow large amounts for a property. But provided your business is performing well and has been trading for at least a year, it is no more difficult than for an employee.
It’s important to seek advice, however, as every lender has their own approach in assessing affordability. Some will take your salary and dividends as your income, while others accept contracting day rates or retained profit in your business. Choosing the right lender can dramatically increase your borrowing power.
What are the risks of a High Mortgage Loan?
As with any debt secured on a property, the main risk is that you are unable to meet the repayments on your mortgage and as a result, your home is repossessed by the lender.
This might happen because you lose your job or your company runs into problems, or possibly interest rates rise so much that your repayments are no longer affordable. On a large loan, interest rises can have a considerable impact.
A good mortgage broker will explore these risks with you and help you mitigate them – with insurance products, fixed rate deals and other options.
How do I get a Large Mortgage Loan?
The process to get a large mortgage loan is the same as for any mortgage. It’s always a good idea to get mortgage advice before you begin viewing property, so that you know your budget is realistic.
Once you have found a property that’s affordable and have made an offer, it’s a question of applying for the mortgage. You will need proof of your deposit, bank statements and payslips. Being accepted for a mortgage is simply a case of making sure that you meet all the lender’s loan criteria.
How can a Mortgage Broker help?
Working with a mortgage broker gives you the best chance of being approved. We will only put you forward to lenders that will accept you. We can explore the options across dozens of specialist and high street lenders – and hundreds of products – to find a loan that meets your needs.
We work with many high net worth individuals to secure high value loans, buy to let mortgages and bridging finance to suit their needs. Some are First Time Buyers, while others are seasoned property purchasers.
Mortgages by Mcateer Ltd is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority. We are registered in England and highly recommended in Google reviews.
Get in touch with us at our registered office in Preston for an initial chat about how we can help.
Mortgages by Mcateer Ltd is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
SOME BUY TO LET MORTGAGES AND BRIDGING FINANCE ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.