A large mortgage loan tends to be defined as one which is £1million or over. At this level of borrowing there are a number of, sometimes more complex, factors to take into consideration when seeking a large mortgage.

Lenders may set maximum borrowing which doesn’t meet your requirements as your income sources may be more complex than a straightforward salary, and your circumstances more involved than for a standard mortgage application

Using a mortgage broker will save the you the time, hassle and expense when exploring your options.

Which lenders should you consider for a large mortgage loan?

Approaching your bank is an option, however, if they are unused to dealing with mortgages at this level you may find the person you speak to (assuming you can get hold of the right person) may not have the required expertise for large mortgage loan lending. They may be compelled to follow a process which is unlikely to work for you at this borrowing level, income complexity or residency elements.

A mortgage broker will short-cut this process for you to get you the best outcome in the minimum time.

Large loan borrowing via Private Banks

For large loan mortgage borrowing over £2m a Private Bank may be the best option as, on the whole, High Street lenders don’t tend to offer borrowing at this level. (Having said that we have placed a large loan with a High Street Bank of £5.7m).

When considering Private Banks the key is to match the client to the most appropriate bank. This is because each bank tends to pursue their own particular specialisms which then excludes certain occupations or regions. Mortgage brokers can research and home in on the Private Bank which matches your needs, and so save you much time and frustration.

Large mortgage loan income assessment

Lending to those with complex income circumstances has become more challenging since the Covid crisis, and hence is affecting those looking to arrange a large mortgage. Lenders may regard ‘variable’ income such as bonuses and commissions, as outside their affordability criteria or take a much lower values into account and request additional evidence that this variable income is sustainable.

For example:

£100k basic salary and £100k bonus (with evidence this has been maintained for past 2 years.)

In prior years you may have been offered a large mortgage loan of £1.1m with a High Street Lender.

Currently this could be reduced to just £450,000 if the lender is not convinced this level of variable income is sustainable which is often linked simply to the industry sector.

Company Director, Self-employed or Partnership

If your employment status is less straightforward, for example, you run your own business and are looking to arrange a large mortgage then you may find obtaining a large mortgage loan a more tortuous process. this is where a mortgage broker can help.

The lender will want to scrutinise your business finances through evidence such as your Business Bank Statements before considering and approving a large loan. You may have made necessary adjustments to your business because of the Covid crisis however, these may not be reflected in the criteria applied by a lender.

The categories of higher risk businesses has also altered in the current crisis with hospitality or entertainment sectors for example, often seen as too high risk for large mortgage lending.

Understanding Non-Sterling income

Certain lenders will not accept applications which include non-sterling income. When seeking a large mortgage loan it is imperative to approach lenders who understand and accept non-sterling income if this applies to your income source. In any event most lenders apply a ‘haircut’ of between 15-20% to account for currency fluctuations, and you need to be aware of this limitation.

This is why Private Banks can offer a better outcome for large mortgage loans as their more personal approach is more aligned with risk taking and complexity. On the whole they will assess the individual, their track record and circumstances when making a lending judgement.

As ever, a mortgage broker can navigate these factors for you as our Case Studies can attest to.

Non-UK resident or lived outside the UK

High Stteet lenders may find that an application for a large mortgage loan combined with a non-UK resident / national status may fall outside their lending criteria. This is where aligning the client with the correct lender is imperative, for example, International Lenders or Private Banks. Another option may be with smaller Building Societies which specialise in arranging a large mortgage loan because the underwriters are able to view applications on a case-by-case basis and assess the risk accordingly.

If you have spent time living or working outside the UK it is often possible to evidence a ‘credit footprint’ particularly if you have maintained your UK Bank accounts, credit cards, or mortgage. A single request for your credit file by your mortgage broker (to avoid needless, harmful repeated searches) will establish your credit track record and score.

Can I place the property in a Trust?

We suggest you obtain specialist tax advice prior to making a decision but yes you may place the property in another entity such as a Trust. Once this structure has been decided we can work with you to identify the best lender to achieve your gaols.

Factors to consider when arranging a large mortgage loan

There are a range if factors to consider when arranging a large mortgage loan and finding the right lender for you is critical.

We have a great deal of experience in this aspect of lending and our excellent reviews bear this out.

If you would like to speak to one of the team about your large mortgage loan please call us or book a consultation with one of our mortgage advisers.

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