With the housing market continuing to grow, property prices in and around London and other big cities are rising. This means that in order to secure the kind of property you want you may be looking for a large mortgage.
High street lenders tend to have upper limits and won’t lend above the £1m mortgage mark. This is because large scale lending can be a big risk.
Consider that if you took a mortgage out at £1m, the lender would be at more risk than if they lent £1m to 5 individual borrowers. If you default then the lender is at risk of losing the full £1million, whereas, if only 1 out of 5 borrowers’ default they are only at risk of losing £200,000.
When looking at purchasing a property that needs a large mortgage you will need to approach specialist lenders and private banks who are willing to lend to this scale.
You will therefore need to build a case as to why these lenders should loan to you. They will need to establish whether you can afford such a high value loan based on your income and creditworthiness.
Generally, you’d be allowed up to 4/5 x your income, but lending on a large scale may require more. Specialist lenders will make discretionary concessions for high earners and affluent clients, allowing up to 6/7 x income.
However, although you could potentially borrow more against your income you will need to also consider your deposit. Applying for a larger loan involves a heavy risk, so having a bigger deposit can lower that risk.
If you’re looking for a large mortgage loan and need help, get in touch. We have specialist advisors who can search for the right lender, best rates and help build a case for the mortgage you need.