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When refinancing or buying high-end property, many customers struggle to find the large mortgage loans required for various reasons. It may be based on affordability, income, or loan to value criteria, but is more often than not because most lenders place limitations on how much they’ll offer one individual. A large loan to one person can be far more dangerous to a lender than several smaller loans of the same value to multiple applicants, because if something went wrong the entire debt is at steak – smaller loans spread the risk.
The good news: If you’ve been turned down it’s important to remember that every lender is different. Where one lender says no it leaves a gap in the market for another to take the risk. As a result there are several lenders that specialise in large loans that can offer far higher mortgages than the rest of the market, and can offer mortgages in excess of 7 million to the right borrower with enough equity.
The following topics are covered below...
Most lenders will cap their mortgages at different levels depending on the loan to value, and how much deposit or equity you have. It is usually tiered so that lower deposit (higher risk) applications are subject to more stringent limitations, where higher deposit (lower risk) are free to borrow far greater amounts.
For example, one lender may cap the amount you can borrow at £500,000 for 90% LTV applications, £800,000 at 80%, and a maximum of £1 million at 75% or below. Depending on your circumstances, there are lenders willing to consider large mortgages up to and exceeding £2 million, even at higher loan to values.
When considering big mortgages, affordability can be key. Of course a lender will need to establish what you can feasibly borrow based on your income, and be confident you’ll be able to meet repayments throughout the life of the loan.
If the income is acceptable, most mainstream mortgage deals are usually limited to 4x or 5x annual gross figure for employees, net profit for sole traders and partnerships, and salary + dividends for limited company directors. However, some lenders are prepared to expand this for high earners looking for bigger borrowings and can consider discretionary income stretches for affluent clients, allowing a far higher maximum mortgage amount, in some instances to an excess of 6x or 7x income.
To assess whether you feel repayments will be affordable or not, please use the large mortgage calculators.
Directors of limited companies can often find it difficult to find a lender, as many only consider income based on earned salary and dividends. This can cause issues when directors choose to leave cash in the business and not draw it out as personal income, but have still earned a healthy net profit. The majority of lenders will ignore net profit in this way, which can really restrict successful business owners who’s accountants have drawn their books up in a way that penalises them, despite being completely creditworthy.
Thankfully, there are certain more specialist lenders with different income criteria, that assess a directors income based on salary and share of net profit. This means that if funds are earned but left in the business, they can still be used in the borrowing assessment.
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*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.
Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.
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