What are large mortgage loans?
- Typically this is when you are borrowing £1m+
- Sometimes a Private Bank is more suitable for these large loans
- Borrowing £500k+ will often be placed with a High Street Bank premier underwriting team
- High-value mortgages differ with lender type
When looking to take out, or when refinancing large mortgages, we will start by talking to you about your objectives, background, plans and goals, as that will then drive the type of lender we talk to and what type of products we may recommend.
The FCA recently defined a High Net Worth Individual as someone who earns £300,000+ or has £3 million worth of net assets. This is very helpful as if you are at this level or above, lenders can be more flexible and it is quite commonly the bar to entry with most Private Banks.
With large mortgage loans, the ‘affordability’ rules are more sophisticated. Therefore we can choose to stay on the high street and use some of the lenders you know well, or we may veer off into the world of Private Banks and use some lesser-known names. The purpose is always to get you the best outcome, so this is how we look at things:
High Street Large Mortgage Lenders
- Straightforward ‘clean’ approach to large mortgage loans
- Mortgage on competitive terms
- Longer-term structure
- The size of the loan is often the only real difference from a traditional mortgage
- Bespoke products for high-value mortgages
- Typically, cheaper than Private Banks
- Focus on the conventional lending
- ‘Dry’ lending: simply offer large mortgage loans with no strings which tend to be based on standard affordability criteria
Private Bank Large Mortgage Lenders
- High Net worth distinction is important, usually high-value mortgages of £1m+
- Relationship with Private Bank is key
- Private Bank will often request Assets Under Management (AUM) i.e., assets invested with them in some form
- Not simple affordability criteria, Private Banks often also take account of sector, jurisdiction, nationality
- Certain Private Banks specialise in particular aspects of large mortgages
- Pricing may be more opaque, depending on many factors
This is where Large Mortgage Brokers add phenomenal value. We have years of experience placing different clients with different banks.
We can advise you on
- Which bank to go to at the outset for high-value mortgage lenders
- Holding the terms you should be offered
- Even negotiating that down e.g., if place assets with the bank for cheaper lending
This is a personal decision, and we guide you on what’s best for you, so we help you pick the mortgage path that will suit you best.
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Giving you peace of mind while you sit back and let us do all the work for you while finding you the best deal for your financial situation.
Assessment of income
- Incomes tend to be more complex when working with High Net Worth individuals e.g., often self-employed, have complicated structures to income, e.g., carried interest from other businesses, vesting stock schedules, income from other assets or countries
- Income assessment is often more complicated and difficult for large loans
- As Large Mortgage Brokers, we assess how best to prove ‘affordability’ or place assets to mitigate the risk
- You may wish to purchase a property through a company and/or backed by a Trust, this arrangement may already be in place or one you wish to pursue wider tax purposes
- High Street lenders are unlikely to want to be involved in structuring, and Private Banks are more open to this approach
- A Private Bank will need to understand the UBO, the Ultimate Beneficial Owner i.e., who is the person behind the structure, and do they have permission to do what they want to do
- If the bank needs recourse from that individual will they be able to get it, and will the bank be comfortable lending at that level?
Cross charging is something that is quite specific to the High Net Worth world.
Say you own a £5million property with a £1million mortgage.
You wish to purchase a second property for £5million.
- In a traditional approach, you would raise a mortgage against the property and put that deposit on another or liquidate other assets.
- A Private Bank might want to then cross charge the asset.
- The Bank will take over the mortgage and then put a charge on the second property.
- So effectively resulted in a 100% purchase on the second property.
- The Bank will assess this as £10 million worth of assets against £6 million worth of debt and therefore will be satisfied to lend.
- Cross charging can be done on a property, or other assets, such as listed stocks.
There are many ways you can achieve your large mortgage goals in ways that are pretty specific to this high mortgage lenders’ sector.
The underlying mortgage does follow the same principles covered in other areas however, the points outlined above are probably some of the more specific things you need to think about when approaching large mortgage lenders.
Specifically, Large Mortgage Brokers are really helpful in advising you at the outset with high mortgage lenders, so you do not have multiple meetings putting together endless amounts of information just so that at the last minute the mortgage deal falls apart because the pricing isn’t what you wanted or something unforeseen occurs.
We can do the hard work at the front end so the back end proceeds smoothly and you can achieve what you want to achieve.