Large Mortgage Loans

As property prices rise and rise, it’s increasingly common for a family home in a popular area to have a seven-figure price tag. Large mortgages aren’t just for the super-rich, they’re also for a lot of normal families.

To help you find the lender best placed to offer you a large mortgage, this guide covers everything you need to know about this type of lending, including how to get one, how much deposit you’ll need and where to find a broker who specialises in large loan amounts.

What is considered a large mortgage?

While there’s no set definition of what constitutes a large mortgage, most people would agree that the category begins at £1 million. This is the minimum loan size that specialist high net worth mortgage lenders will usually deal with.

For mortgages amounts higher than this, the borrower usually needs to qualify for high net worth mortgage exemption. With this in place, the usual lending regulations don’t apply and the mortgage provider has the flexibility to offer bespoke deals and high loan amounts.

The upper limit of the category is open ended. Even the extremely wealthy often prefer to get a mortgage than buy outright, since mortgages have low interest rates. Investing your money elsewhere, at a growth rate that’s higher than your mortgage rate, can be the sensible financial choice.

So, there is a market for mortgages of £4 million, £5 million, even over £6 million.

There isn’t a maximum amount you can borrow, as long as you can connect with the right lender, but you might struggle to find one without the help of a specialist mortgage broker.

High-net-worth mortgage exemption

High-net-worth mortgages are a subset of large mortgages offered by private banks and lenders to a select group of customers.

According to Financial Conduct Authority (FCA) rules, you’ll be classed as a high-net-worth customer if:

• Your net annual income is over £300,000, or
• You have net assets of over £3 million.

The FCA recognises that customers with this level or income or wealth don’t need the same protection from debt that other customers do.

So, it allows private lenders to offer high-net-worth mortgages with far fewer rules and regulations than they set for mainstream mortgages.

You may be able to:

• Borrow in higher multiples of your salary (sometimes even 10-20 times)
• Borrow at an LTV of up to 100%
• Borrow on an interest-only repayment plan if you don’t want your wealth tied up in property
• Repay on terms that suit you rather than solely on a monthly schedule.

Most high street mortgages are not offered to customers directly as the lenders who offer them work exclusively through specialist brokers, like the high net worth mortgage advisors we work with.

Large mortgages from high street lenders

Although some mainstream lenders have private arms that offer bespoke deals to wealthy customers, they still have maximum loan caps and can’t provide mortgages over £10 million.

Several offer up to £5 million, but anything less that £1.5 million can be constrained by the lender’s usual rules around loan-to-value (LTV), income multiples, the types of income that can be considered, and other affordability factors., unless you’re a high net worth individual.

It’s common that they require at least a 10% deposit and have a lending cap of up to five times your income. So, you can potentially get a mortgage of £1 million from a mainstream lender if your net annual income is over £200,000, and you have a deposit of over £100,000.

However, there are other restrictions you need to watch out for. Some lenders reduce their maximum loan-to-value (LTV) as the loan amount increases, e.g. they’ll lend:

• 90% of the property value if it’s below £500,000
• 85% of the property value if it’s below £1 million
• 75% of the property value if it’s over £1 million

This would mean you’d need a £250,000 deposit to buy a £1 million property.

Here’s how that scales up for larger properties:

*Assuming the lender caps lending at 5x income.

A common issue with applying to mainstream lenders is that high incomes are often not received entirely as a monthly salary.

If you’re compensated through lump-sum bonuses, commision, vesting shares, or many other types of remuneration, you might not be able to prove your income at its true level.

Private mortgage lenders

While there’s some flexibility within the private lending  divisions of high street banks, it will only go so far. There are, however, private mortgage lenders who can offer completely bespoke deals if you qualify for high net worth exemption.

These lenders can offer uncapped income multiples (more than seven times salary), higher loan amounts and personalised terms and rates. One caveat to keep in mind, though: they usually only work through specialist mortgage brokers.

You might choose a private mortgage provider because…

How to get a large mortgage

Large mortgages are offered by a limited range of lenders so, in that sense, they take a little bit more effort to secure. Still, it’s well worth putting in that effort to find the right deal for you.

Here’s a step-by-step guide.

Step one: Prepare your paperwork and evidence

With any mortgage application, the lender will need to see evidence of your income and assets.

With large mortgages, your financial situation can involve additional complexity, such as non-liquid assets (e.g. valuables and works of art) or an irregular income (e.g. lump-sum bonuses). This can make collating your evidence more time-consuming.

If you work with a broker, they will shoulder the administrative burden of preparing your paperwork, so you’ll just need to follow their instructions and provide everything they ask for.

Step two: Seek professional advice

The biggest challenge of finding a large mortgage is knowing where to apply. It’s not easy to find out the maximum loan amount offered by a particular lender, so you could be wasting your time making applications that are sure to end in rejection.

The best way to avoid this is to work with a broker who specialises in large mortgages. Once you tell them the details of your situation, such as your net annual income and the loan size you need, they’ll know exactly who you should approach.

Some of the other benefits of working with a broker are:

Step three: Enter negotiations

Large mortgages often demand direct negotiations between your broker and a specialist high net worth lender.

Rather than ticking boxes to establish your eligibility, the lender will want to understand your financial situation holistically and in detail. So, your broker will present your case personally.

If you fall into the high-net-worth category, they will be responsible for negotiating the details of your bespoke deal, such as a personalised rate or a capital repayment plan.

There is a lot of room to negotiate with high-net-worth mortgages, so you’ll want to choose your broker carefully.

What if you’ve been rejected for a mortgage?

You can still get approved with the help of a broker. It’s not unusual for large mortgage applicants to be refused by mainstream lenders.

Often, it’s not because the property is out of your price range, but simply because the lender’s borrowing restrictions aren’t applicable to your circumstances.

The solution is to apply to a specialist lender who evaluates applications on a case-by-case basis rather than with a tick-box approach.

Provided you have the assets or income to support your case, it’s highly likely you can find the mortgage you need through the process outlined above. Having been turned out previously is no barrier to approval.

Large buy-to-let mortgages

You may also be looking for a large mortgage to buy a luxury buy-to-let property, rather than a home for yourself. The process for this is slightly different, as lenders will assess the potential rental yield as a factor in the decision-making, as well as the other usual factors.

Still, you could face the same barriers as with any other large mortgage.

Many lenders offer a lower LTV for buy-to-let mortgage, so you may need a very large deposit. And the amount you can borrow may be limited by your income (or the portion of your income they’ll consider).

But, again, there are specialist lenders offering large buy-to-let mortgages. They’ll look at all the details of your situation and evaluate your case on its own merits, rather than how well it fits with their pre-defined criteria. For example, if you can show that you’re a successful property investor with a buy-to-let portfolio, they can take this into account.

Get matched with a broker who specialises in large mortgages

When dealing with large mortgage applications, going directly to lenders is likely to lead to disappointment. Private lenders who are best placed to offer these arrangements are usually only contactable through brokers.

Plus, specialist knowledge and experience are required to identify the right lender and negotiate with them to secure the best deal.

Not all brokers have that knowledge and experience, but we can put you in touch with someone who does.

We offer a free service that can match you with a private mortgage broker who deals primarily in large mortgages and knows this market inside out.

If you’d like to schedule a free, no-obligation chat with a high net worth broker we’ve handpicked to manage your case, simply make an enquiry or give us a call on 0808 189 0463.