Buying high-end property or a large home is exciting, but the process of securing a mortgage for a luxury purchase is different than it is for more modestly priced homes.
If you’ve just landed a new promotion or experienced huge growth in your business, it’s normal to want to upgrade your lifestyle. However, the process of getting approved for a loan, finding the right property, and making an offer is complex enough without having to worry about whether or not you’ll actually be able to secure the financing.
If you’re in the market for a large mortgage, you can do a few things to increase your chances of getting approved.
Or, in other words, strategies to boost your mortgage borrowing power. This article will tell you how.
Remember, if one lender declines your mortgage application, the market has many specialists who might say “yes.”
To help you prepare your mortgage application, strengthen your borrowing power and improve your chances of getting approved, we’ve listed 5 strategies that will help you get a large mortgage: But first things first.
What is Considered a Large Mortgage in the UK?
The question “What is Considered a Large Mortgage?” doesn’t have a straightforward answer. It really depends on the lender’s criteria. However, we can give you a range.
In the United Kingdom, a large mortgage is typically a loan of more than £1 million. But this limit can be higher or lower, depending on the lender.
For example, some lenders may consider a mortgage of £500,000 to be a large mortgage, while others may only classify loans of £700,000 or more as a large mortgage.
However, it is always advised to refer to a large mortgage specialist in order to secure the best possible terms and be confident you’re getting the right deal for you.
Now let’s talk about the strategies.
5 Strategies That Will Help You Get A Large Mortgage
1) Pay Off Any Other Outstanding Debt:
One of the very first things that lenders evaluate is your personal income and expenditure. Lenders will consider the percentage of your monthly income that goes towards paying off or servicing debts. The lower your debts the more favourably the lender will assess your application.
However, some debts and expenses may be necessary. For example, school fees may be unavoidable! As long as these expenses are affordable or can be serviced from another asset, then an underwriter should be comfortable to lend.
2) Save For A Large Deposit:
Raising a large deposit is one of the best ways to get a large mortgage. This is because it reduces the amount you need to borrow, reducing the LTV (loan-to-value) ratio and also shows lenders that you are a low-risk borrower.
The average deposit is around 15% of the home’s purchase price. However, if you can afford 30% or more, it’ll definitely increase your chances of getting a large mortgage as you’re having to borrow less.
However, some exclusive lenders are willing to lend up to 95% for £1m+ mortgages if your income is particularly strong.
3) Raise Your Credit Score:
Your credit score is one of the most important factors lenders consider when evaluating your mortgage application. This is because it is a good indicator of your payment history and creditworthiness.
The higher your credit score, the better your chances of getting a large mortgage.
If you have a low credit score, then you can improve it by paying your bills on time, maintaining a good credit history, and using a credit monitoring service.
Experian and Clearscore are two great apps, that will give you personalised advice and feedback on how to improve your credit score.
To raise a large mortgage it is imperative to have a clean credit report, only very minor blips can be acceptable.
4) Speak To The Right People
Most people don’t realise this, but a number of high street lenders actually have specialist teams who deal with larger, more complex mortgages.
Due to strict regulations, regular advisors in high street banks have very rigid criteria for loan applications. This can often be frustrating, especially when you know you’re in a position to afford the loan, but you’ve been rejected because you don’t tick a certain box.
Let’s say for example, you’re a high net-worth individual but don’t have a “traditional income” and a lot of your net-worth is tied up in assets. This is something the specialist teams may be able to help with.
These teams will usually have more direct access to the underwriters and can make a case on your behalf if they genuinely believe you will be able to afford repayments.
However, it’s worth noting here that it’s ultimately down to the lender to decide whether or not your application is referred.
For example, at Advias, we have some great relationships with lenders whom other brokers simply can’t access. The reason for this, is because we’re very selective about who we put forward and the level of detail we go into during our initial discovery process.
If we were to constantly call them about “making an exception”, they would quickly get annoyed and likely strike us from their books.
That’s why for every client who contacts us, we have an extensive consultation. It helps us find potential angles that may help to make a case, and it also increases your chance of being accepted.
5) Go in prepared and look for compensating factors:
Compensating factors are aspects of your financial situation that can offset a weaker qualification. For instance, if you have a high income but a low credit score, then your high income can be a compensating factor.
Other examples of compensating factors include a low debt-to-income ratio, a large deposit, and a long employment history.
If you can go in with all the information and provide some compelling compensating factors, then you may be able to negotiate a larger mortgage.
Remember, lenders would love to give you a mortgage, but they also need to minimise risk and ensure repayment. Help them to make this an easy decision!
What Lenders will Offer You a Large Mortgage?
Million or multi-million-pound funds are not easy to come by. So, it is not really surprising that only a handful of specialist teams in the UK offer such large mortgages.
When people go searching for a large mortgage, they often don’t realise that they will have to go through a different process than they would for a more modestly sized loan.
The larger the mortgage, the larger the risk and as such, there needs to be higher criteria in place.
As mentioned above, you will need to approach a specialist lender who deals exclusively in large mortgages. These lenders are typically private banks or specialist divisions of larger banks.
What Income do I Need for a Large Mortgage?
As a general rule of thumb, if you are looking to secure a mortgage of £750,000, you will need to have a household income of at least £150,000. This is true with most lenders.
However, many lenders still have restriction caps when it comes to offering a large mortgage.
For instance, if you have a high net worth but not a large income, traditional lenders may only offer you a loan of up to 4.5 times your annual income. If you are classified as a high net worth individual then loan to income may not be applicable as lenders may in a position to apply a high net worth exemption.
So, it all comes down to who you approach and how much they are willing to lend you.
Can I Get a Large Mortgage with Bad Credit?
This really depends.
If you have existing payment plans, CCJ’s or defaults on your credit file, you’ll likely find it difficult to get any mortgage, not just a large one!
However, if you’ve had bad credit in the past but you’ve now paid off your debt and you’re earning a higher income, some specialist lenders could potentially make an exception.
Just be prepared that you’ll also need to be able to make a case for why this debt happened in the past, and ensure the lender has confidence it’s not likely to happen again in future.
Can I Use Assets to Take Out a Large Mortgage?
Yes, technically you can use assets to take out a large mortgage, but not all lenders will take this into account.
For instance, if you have a portfolio of investments or other assets such as equity in a property, you may be able to use these as a form of security for a large mortgage.
This can be a good option if you have a high net worth but not a large income.
However, you want to be careful in terms of what you’re actually signing up for and any potential risk you’re putting your assets in.
As such, it’s better to consult a qualified mortgage specialist to discuss your options before making any decisions.
If you would like to get a large mortgage and want to save time, have been rejected in the past or you’re struggling to find the right lender, then we can help.
You can always get in touch with one of our expert mortgage advisors for advice.