High LTV Mortgage

Please contact us for a no-obligation conversation with an adviser about the most suitable mortgage option for you.

To book a meeting, to see how we can help you

Please click here

PLEASE NOTE – Rose Capital Partners are in the process of merging with Heron Financial, therefore it will be best for Heron to pick up your enquiry from here. Please do use the link here to book in with the team but if you have any concerns, please call us on 020 7935 7866 or contact info@rosecp.co.uk 

High LTV Mortgage

High LTV Mortgage

All about high Loan to Value mortgages with Richard Campo.

What is considered a high Loan to Value ratio?

Most people are surprised to learn that if you’re borrowing more than 75% of your property’s value – so you’re putting down less than 25% deposit – that’s considered a high Loan to Value mortgage. 

The reason is that house prices have never gone down more than 25% in any one cycle. So if you’re below that threshold you’re considered high Loan to Value. 

In this article we’ll talk through the specifics when you’ve got less than a 25% deposit or you’re buying a higher value property. For example, the average property we deal with is over £1 million in London and the South East, where we’re based. A 25% deposit on a property of that value is a lot of pennies – so unsurprisingly a lot of our clients don’t have 25%, particularly if they’re buying for the first time. 

What do I need to consider if I need a high Loan to Value mortgage?

With high street lenders, you can get away with a 5% deposit up to £1 million and a 10% deposit up to £3 million. Those thresholds are way higher than people think. You can get a conventional mortgage with a fairly small deposit . 

But if your situation is a bit more complicated there are a couple of other things you can do. Some banks we work with ‘cross-charge’ assets. Say, for example, you’ve got one property that’s worth £1 million and you want to buy a £2 million property, but you don’t want to release all the money on the first property. You could take the loan over both. The bank takes a charge on both properties, so you have a £2 million loan on £3 million worth of assets. So theoretically it’s a 100% purchase, but it’s backed with another asset as well. 

Something else that comes up from time to time is called Lombard lending. This is a loan against assets other than property. That’s typically a listed share portfolio or liquid stocks and shares. As a rule you can borrow up to about 50% of the value of your assets. So if you’ve got a £1 million share portfolio but no cash to put into a purchase, you could then raise roughly £500,000 against your shares and put that toward a property purchase. Then we get a mortgage for the remainder – or you can simply buy a £500,000 property. 

We do a lot of equity release as well – but not necessarily the typical version for older people. You might live in a property and be looking to buy another. You can actually raise money against other assets like your Buy to Lets which is a really great way around this. It’s probably most typically what we do in this space.

Speak To An Expert

Our key aims are to fully understand what you are looking to achieve, create a solution tailored to your needs, deliver results through an excellent service and build a relationship for life.

Who can get a high Loan to Value mortgage?

The obvious thing is that it’s all about income. Pretty much all banks will offer you 4.5 times your income. With a £1 million to £2 million property banks might offer five or even six times your income.  

If you’re putting down a small deposit you need a really strong income. Banks look at your profile. So if you have a 5-10% deposit and you’re a young professional fairly early on in your career with a really good income, banks are really willing to help you. They recognise that you just haven’t had time to save up a big deposit. 

There may also have been a life event. Something we do a lot of is where a client is separating or divorcing and has left the family home. That’s a situation where a high Loan to Value mortgage comes in – because their money is tied up in the family property. Some banks will take a lenient view on that one. 

How do I get a high Loan to Value mortgage?

We follow our process – which starts with a fact find. It’s not a form filling exercise. We might identify that you have property in the background, some shares here, some cash there or anything else that may be useful.

There might be things we can leverage in terms of the mortgage. Just be open and honest with us because we might find some creative solutions for you. Then it’s the usual process. We’ll do the research and identify a lender to work with. 

It’s about the structure as well. Let’s say, for example, you’re separating from a partner, you’re maintaining a family and buying a second property for yourself. Banks can structure ‘bullet repayment’ lending. You could do a 90% or 95% mortgage on an interest-only basis, which keeps your monthly payments down, on the proviso that you reduce the debt each year maybe by 1-3%. 

You often find people in this space have bonuses or variable income. So if you’re quite happy to reduce the loan down once or twice a year and keep your outgoings to a minimum, bullet repayment is really effective. Because you are writing into the contract that you’re reducing the loan, the FCA deems it a repayment mortgage as well.

Most people aren’t even aware you can do that. It’s not for everybody – you have to have the means and capacity for this to work and it does tend to be quite self-fulfilling. You might have a basic salary of £200,000 and a bonus of £200,000 – in that case this model is really going to work for you.

What else should we consider with a high Loan to Value mortgage?

In these situations fact finding is so important. It’s all about working with our clients, exploring their situation and finding the best way forward for them. As a broker we have exclusive access not just to products but to actual banks, particularly in the private banking space. 

We’re very good at matching people by industry, by banker, by sector and even by jurisdiction. This is important as well because a lot of our clients are internationally mobile or not from the UK originally. It’s beneficial to find a bank that works out of where their business operation is or where they are from originally. These little nuances save so much time and effort and ensure you get a better outcome. 

Someone looking at buying a £1 million property is a successful person. You’ve got far more important things to do with your time than mess around with a mortgage application. It’s just a case of identifying the right broker to work with to make your life as easy as possible. The side benefit is that you’ll get at least the same terms, if not better, by coming through a broker. We get exclusive rates because of the level of mortgages we organise. 

Your home may be repossessed if you do not keep up with your mortgage repayments.