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Luxury home mortgages

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 3rd July 2019* | Published: 29th May 2019

Buying a stately home, mansion or other type of luxury property is something that many prospective UK home-buyers dream about. Or perhaps your goal is to build your dream house from scratch?

You may think that the process will be plain sailing if you’ve got a good chunk of cash put away for a deposit and / or construction fees, but when it comes to getting a mortgage on a stately home or luxury self-build, there are lots of factors to consider.

So, whether you’re looking to get a mortgage on a mega mansion or any other type of luxury property, take a read of this article before making any commitments.

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Getting a mortgage on a luxury property

Buying a luxury home in the UK requires a slightly different approach than if you were to buy a “non-luxury” property.

The term “luxury home” is broad, encompassing a wide variety of build types, including mansions, stately homes, farm houses, cottages and even castles. Generally, a property is considered “luxury” if it exceeds £500,000 in price and offers grand amenities which are not commonplace in standard homes.

Of course, the location will also play a considerable factor; £500,000 might only get you a two bedroom flat in the centre of London, whereas the same amount may well buy you a luxury mansion in less affluent parts of the UK.

Getting a mortgage on existing luxury property

If you’ve got your eye on a luxury property that’s already on the market ready to move into straight away, you shouldn’t be too restricted when it comes to finding a willing mortgage lender (depending, of course, on other individual circumstances).

Bear in mind though, if you require a very large loan or the property is a non-standard build, there are additional factors which could inhibit your application. Lenders may cap how much they are willing to authorise, and are generally more cautious with non-standard properties.

Can I get a mortgage on a mansion?

Yes, provided you meet the lender’s affordability and eligibility requirements. Obviously a large loan will be required for a mansion, which means specialist advice and a niche lender will need to be sought - the advisors we work with have access to high net worth lenders and private mortgage providers who specialise in these properties.

Make an enquiry to speak to one of them on the phone today.

Can I get a stately home mortgage?

A stately home is a specific type of mansion that is, or was formerly, occupied by an aristocratic family. Mortgages on these properties are generally more difficult to come by than they are for other types of mansion and luxury property.

Fewer lenders will consider these deals and there may be other complications for the buyer to take into account, such as the possibility of the stately home being a listed building or having elements of non-standard construction.

Although stately home mortgages can be more difficult to obtain than other mansion mortgages, with the help of the whole-of-market brokers we work with, you can rest assured that you will have access to all of the best deals you qualify for.

High net worth mortgages

If you’re looking to buy a ready-to-move-in luxury property, the likelihood is it won’t come cheap, as we’ve already touched on.

Even if you have the finances available, many high net worth customers look to get a mortgage so as not to tie up their cash in a single asset. If this is the case, you will probably need to approach a specialist broker.

Your standard high street lender may cap how much they are willing to lend, and is unlikely to have the right expertise to suit your needs. We’re in contact with a number of specialist high net worth mortgage advisors, so make an enquiry today.

Building your own luxury property

If you’re looking to build your own home from scratch, or aim to carry out major renovation works on an existing property, you may find a number of obstacles in your path.

For one, they’ll take a long time to construct, in which case bridging finance may be an option - if you’re in a situation to do this.

What’s more, your idea of a “dream home” may not appeal to everyone; unique or unusual architectural design can be risky when it comes to reselling.

Self-build mortgages

Self-build mortgages are products geared towards borrowers with the means and expertise to build their own property from scratch, or at least oversee its construction. They usually come with higher interest rates than standard residential mortgages and the funds are typically released in staged draw-downs

Self-build mortgages can be tricky to get at the best of times, let alone if you’re applying for a particularly large sum.

We can’t stress the importance of seeking specialist advice if planning a self-built luxury home, so you have peace of mind that you’re dealing with an expert in the field, and benefiting from the most competitive interest rates possible.

Again, you’re likely to find it more difficult to get a mortgage if you’re building a non-standard construction or carrying out major renovation works on a derelict building, and providers often cap how much they are willing to lend to help minimise the risk factor.

What factors impact eligibility when getting a mortgage on a luxury home?

Non-standard construction types

Many properties are considered “non-standard”, and luxury mansions and stately homes will almost definitely fall within this bracket. Typically, any build that is deemed non-standard is seen as higher risk by mortgage providers. The severity of the risk completely depends on the property type, how old it is, whether it is of historic importance, alongside a number of other factors.

All lenders carry out eligibility checks before accepting or declining a mortgage application, and each will have different criteria surrounding what is accepted. Some providers are more than happy to consider non-standard properties, whereas other will not lend to them at all.

It all comes down to whether the provider feels confident that your home can act as sufficient collateral if you are repossessed and the property resold. So, depending on your circumstances this may mean you are declined a mortgage, offered less competitive rates, or are required to put down a larger deposit.

Contact us to speak to a non-standard construction mortgage specialist.

Loan to Value

The loan to value (LTV) ratio of your property can significantly impact how many providers are willing to lend to you, and the rates you’re offered - especially when it comes to unique properties or those that are to be subject to major renovations. For standard residential mortgages, many lenders are happy to loan on an 85% LTV or below, others 90%, and a few even 95% (5% deposit).

However, due to the risk posed by more unique, non-standard builds, providers will often demand lower LTV. The exact amount of deposit required will vary by lender and also depends on the specific property, but 80-85% LTV is a ballpark figure.

Affordability

Affordability is a big factor for mortgage providers when it comes to luxury homes and non-standard constructions in general. In normal circumstances, lenders usually cap how much they will loan you at 4.5x your annual income, with some stretching to 5-6x. However, there are likely to be far stricter rules in place for a luxury home mortgage.

What’s more, if you’re planning major refurbishments or are building a property from scratch, this will also be factored into affordability calculations, and may restrict how much you are able to borrow even further.

Age

Older borrowers can have additional struggles getting a mortgage on a mansion or other luxury home (or any type of mortgage), as they pose additional risk. Many lenders have restrictions on the age of the applicant, some impose a maximum term length, and others will not lend into retirement at all. But fear not - some providers are more than happy to lend to retired applicants, provided you have proof you can afford your repayments.

This is why it’s so important to contact a whole-of-market broker. The ones we work with  will scour the market to find you the best rates regardless of your circumstances. For more information on later life lending click here.

Credit history

As we’ve established, every mortgage provider has different eligibility criteria. Generally, you are considered higher risk if you have a history of adverse credit, which can further impact the chances of your application getting approved, as well as what LTV and income / affordability is required.

However, there are many lenders who are happy to accept certain forms of adverse, and the decision is often based on how severe the instance was, how long ago it occurred (the longer, the better) and the reason behind it (unforeseen life events are generally easier for lenders to overlook than avoidable financial mismanagement).

Visit our bad credit mortgages section for more information.

Why you should speak to a whole of market mortgage broker if you’re buying a luxury home

We’ve helped over 82,000 people find the right mortgage, even those who may have been declined a mortgage or had bad credit history.

In fact, our customers consistently rate us 5 stars on Feefo, mainly due to our high levels of service, but also because we offer offers a 5-star service with access to expert brokers who are:

  • Whole of market.
  • Have a working relationship with all lenders (including private ones), not just a select few.
  • Already know the lenders to go to as they successfully arrange these already.
  • Able to offer bespoke advice on luxury home purchases
  • OMA Accredited advisors.
  • Have completed a 12 module LIBF accredited training course.

Talk to a luxury home mortgage expert today

If you like what you’re reading or require more information, call Online Mortgage Advisor on 0800 304 7880 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee, and there’s no obligation or marks on your credit rating.

Updated: 3rd July 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of 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 info 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.