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Frequently Asked Questions
How does a mortgage work?
Most high-value property is too expensive for people to buy just using savings or cash. Buying in cash may also not be advantageous from a fiscal perspective or when it means you put all your money into a property but have no remaining liquidity. Mortgages are loans that lenders offer to allow individuals to borrow funds to buy a property if you can’t or don’t want to buy it outright. You repay the lender over several years.
For most mortgages, you will need to put down a cash deposit. You will owe the remaining amount to your lender, and you will repay the loan in monthly instalments over a set period (known as the loan term). If you cannot repay the loan, your lender can repossess your home.
What different types of mortgages are there?
For anyone looking for high-value mortgages (£1 million or more) or if you are a high-net-worth individual, there are lots of mortgages to choose from. The best mortgage for you will depend on your financial background, how much you want to borrow, the type of property you want to buy (e.g., residential, buy-to-let, second home) and your ambitions. Enness’ expert team of brokers will be able to talk you through your options, but high loan-to-value mortgages, million-pound-plus mortgages, buy-to-let mortgages, interest-only mortgages and equity release mortgages may all be options.
What type of properties will you lend on?
There are lenders for every type of property. As an independent broker specialising in high-value mortgages, Enness has access to more than 500 lenders. Enness has connections with lenders that specialise in every type of property including buy-to-let mortgages, commercial property purchases, property development, high-value mortgages, foreign national mortgages and non-resident mortgages and more. Your broker will source and negotiate the most competitive mortgage for you, whatever kind of property you are hoping to buy and however much you want to borrow.
How much can I borrow?
For most of the market, lenders will offer a maximum of 4.5 times a borrower’s income. Recently, some lenders have raised this to 5 or 5.5 times a borrower’s income, although this tends to be in exceptional cases for individuals who are not high-net-worth individuals but who have higher salaries. Lenders base the 4.5 times your salary calculation on what they believe most borrowers can comfortably afford in terms of repayments and limiting risk for all parties.
For high-net-worth individuals, there is more flexibility around what you can borrow, often with less emphasis on specific multiples of your income, provided the mortgage is clearly affordable. High-net-worth mortgages are available to anyone with an income of more than £300,000 or assets of more than £3 million (excluding the value of your principal residence). If you are eligible for a high-net-worth mortgage, you effectively opt-out of regulated oversight, which means lenders have much more flexibility in what they can offer you, affordability and so on. These mortgages are advantageous if you have significant wealth but comparatively little income, global assets, multiple income streams and so on. Overall, a high-net-worth mortgage makes it easier to borrow more based on your global wealth rather than your income in exclusivity.
How much deposit do I need?
Some first-time buyers can put down deposits of 10% - 15%, but generally deposits sit in the 20% - 25% range, especially if you are already on the housing ladder or are looking to upsize.
If you are borrowing a significant amount, a lender may require you to put down a larger deposit. A lender may let you put less down in other cases, but this will tend to be for VIP borrowers and those with a very high income in combination with a significant net worth. Some private banks offer 100% mortgages if you can put forward relatively significant assets under management, for example. It is worth noting that sometimes, you may find it advantageous to put down a larger deposit if it means you benefit from better rates in the long-term – your broker will be able to explain your options on this.
What is LTV?
LTV stands for loan-to-value. The loan-to-value ratio refers to how much you borrow as a percentage of the property's value. Amongst other things, lenders use the LTV to assess risk – generally, the higher the LTV, higher the risk for the lender. 75% or 80% LTV is usual for the majority of mortgages, although some lenders offer higher LTV mortgages for the right borrowers – usually high-net-worth individuals.
How long does a mortgage last for?
The shortest mortgages have terms of 2-3 years, but these tend to be rare and used in particular scenarios. At the other end of the scale, it is sometimes possible to have 40-year mortgages, but these tend to be offered to mainstream borrowers with good income looking to maximise what they can borrow, rather than the norm for high-net-worth individuals.
For high-net-worth individuals, mortgages with terms of 5 to 25 years are typical, although mortgages in the 5-to-15-year range tend to be the most usual.
What is the difference between an interest-only mortgage and a repayment mortgage?
An interest-only mortgage is when you effectively pay your lender the interest on the amount you borrowed, but you don’t make repayments on the principal loan amount. At term, this means you have repaid the borrower the interest you owe, but the principal remains outstanding, and you will need to repay it. Interest-only mortgages are relatively rare these days and are generally only offered to high-net-worth individuals who will easily be able to repay the principal amount at term.
Repayment mortgages are the most common type of mortgage today. Here, you will make monthly repayments to your lender, repaying both the capital and interest each month over the loan term.
What’s the difference between a fixed-rate mortgage and a variable-rate mortgage?
A fixed-rate mortgage refers to the fact that the interest rate agreed with your lender will not change for the loan term.
With a variable-rate mortgage, the interest that you pay will reflect a specific base rate (e.g., SONIA), with a fixed percentage added on top. Your mortgage will follow the base rate, effectively rising and falling in line with any changes to the base rate over the course of the loan term.
Can I get a mortgage if I’m self-employed?
Generally, yes, provided you can put down a good deposit, afford the mortgage in terms of income, and your income is steady and has been for some time (lenders will generally look at your tax return over the past three years). Self-employed mortgages generally tend to be more challenging to arrange if you approach lenders without the help of a mortgage broker. Lenders view self-employed borrowers as riskier than employed borrowers, especially if you want a mortgage of £500,000 or more. Enness has a track record of helping self-employed individuals to borrow significant amounts, connecting you with lenders that can look at things like directors loans that you will eventually pay yourself back or recent changes to your business that have dramatically increased your income.
What is a remortgage?
A remortgage is the process of replacing your existing mortgage with a new mortgage from another lender without buying a new property. Your ‘new’ lender will pay off your ‘old’ lender, and you then make monthly repayments to this new mortgage provider, usually at a better rate or benefitting from more advantageous terms.
Can I buy at an auction with a mortgage?
No. However an alternative solution is auction finance. Auction finance is used because most mainstream lenders can’t offer traditional mortgages within the 28 days you will usually have to pay off the remaining property amount after the auction. You can arrange auction finance and draw down funds very quickly, especially if you have in principle offers and have started working with a lender to organise paperwork before the auction. Auction finance can be completed very quickly – even in as little as a few days or a week – meaning you can meet the very short turnaround between the auction and the deadline for payment. You can either refinance auction finance with a long-term lending option like a mortgage or pay off the loan through a liquidity event.
How do I know I’m being offered the best mortgage available to me?
Enness is an independent mortgage broker. As such, your broker can approach any lender in the market to negotiate a deal for you, and your broker will be working exclusively in your best interests. Enness also isn’t bound by any incentives to work with or offer you products from specific lenders, as can be the case with other mortgage brokers.
Wherever possible, your broker will negotiate at least a couple of offers for you to compare.
Your broker will talk you through all your available options and your offers, including the advantages and drawbacks of each, so you can make an informed decision about what’s best for you. Your broker will also be able to explain why they approached specific lenders for your mortgage offers (often lenders have specialisations in certain types of mortgages, or your profile/needs will align well with the expertise of a specific lender).
Sometimes you will find that a slightly more expensive rate with more flexible or advantageous terms is more attractive to you, so your broker will never promise to deliver the ‘cheapest’ offer. Whatever your broker offers you, it will be the very best fit for your needs, and Enness will always share everything you need to know to make the best decision.
What fees are involved in getting a mortgage?
Enness only charges a brokerage fee when you are happy with an offer your broker has sourced for you and you are ready to formally submit the mortgage application to the lender. By charging you a fee at this point, Enness can stay independent, and the onus is on your broker to present the most competitive mortgage possible for you to move the deal forward. Your broker will spend as much time as needed approaching lenders, seeking finance and structuring the best mortgage for you and you are only charged a fee for this work when you are happy to proceed.
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Our Approach to New Requests and Clients
Step 1: First Contact
All first contacts are managed by a relationship manager who understands the market we operate in, can quickly see if we can help or not, and will match the client to the best possible broker based on their needs.
Step 2: Arranging a Meeting
The client will then speak to the broker at a time that suits them and over the most appropriate medium – we get this part arranged as fast as possible and can often happen instantly.
Step 3: Meeting your Broker
The broker will work quickly to understand the client’s position, background, circumstances and plans. At this stage, we will only talk and we won’t ask for paperwork or forms to be filled unless it is absolutely necessary.
Step 4: Discussing your Options
The broker will then explain what we think is possible (from the widest view of the market), what it will cost, what the process will be and what the risks or problems to be overcome are.
Step 5: Agreeing on your Mortgage
At this point, if the client is happy, we will set to work on agreeing on the mortgage terms in principle, assembling paperwork and documents to support the case, discussing the lending request with the correct people at the banks we think are best placed and doing as much as possible to ensure the first approach will work.
Step 6: Submitting your Application
Then, at this point, if the client wishes to proceed with a formal application, our fees are agreed and we set to work on the formal application.
Step 7: Closing the Deal
Through the entire process, we will be hands-on and pushing every detail to ensure the transaction is completed as cleanly and quickly as possible, managing all other parties in the process.