Mega Mortgages: How Big Are The Biggest Mortgages In The World?

Despite doomsday reports about a potential housing market crash, there is no shortage of super-prime property hitting the market around the world. Last month, Jay-Z and Beyoncé snapped up a $200 million ocean-front Malibu property (reportedly in cash), and in spring, London’s The Holme hit the market for a reported quarter of a billion pounds. Back in the US, The One – a sprawling ultra-modern LA mansion – sold at auction for a cool $126 million (a steal compared to the $295 million list price) back in March, and a luxury penthouse was snapped up in May in Dubai’s Marsa Al Arab Hotel for $114 million.

So, while super-prime property is coming to market and being sold, are mortgages matching the seemingly growing property prices, and is there a limit on how high mortgages will go?

What’s The Largest Mortgage Possible?

Ultimately, the sky is the limit when it comes to mega-mortgages: with some caveats, of course. As property prices increase, so will mortgage sizes, although it’s worth remembering that a mortgage of $80 million won’t be used to buy a property for $80 million – loan-to-value ratio plays a huge part in this world (an $80 million mortgage could potentially buy a property in the region of $170 million for example – 100% loan-to-value is almost unheard of at the top of the market). What predominantly dictates the size of a mortgage is the value and quality of the property, followed by the liquidity of the market it’s in, and the buyer’s financial profile and asset base. 

Valuations are critical in this world – it’s easy for a seller to put a property on the market for $200 million, but if a professional and impartial valuer dictates it’s only worth $150 million, it’ll only be possible to borrow against the property’s real-market price. Depending on the size of the mortgage and the structuring of the deal, personal guarantees and additional assets may be required by lenders, but this will always depend on the calibre of the buyer, their wealth and the size of the mortgage.

Where Is It Possible To Get The Biggest Mortgages In The World?

Logically, you’ll find the biggest mortgages in the world in prime property hotspots. Leading capital cities of the world tend to have the priciest properties (predominantly London, New York and Los Angeles as well as Miami, Hong Kong, Singapore and large cities in Latin America and other parts of Asia) and therefore the largest mortgages are written in these places. However, some of the most sought-after regions of the world for the rich and famous to holiday or own trophy properties – think the French Riviera, Paris, Aspen, Austin and increasingly, Dubai – are also locations for mega-mortgages. 

While there’s no hard-and-fast rule for where you’ll find the biggest mortgages, they tend to be in sought-after and – critically - relatively liquid prime markets. While a property could conceivably be on the market for $150 million in rural Italy, for example, a mega-mortgage would be a stretch as it’s not in a property hotspot and lenders will be hesitant to lend, leaving a cash purchase the only option. Depending on the country and type of property, often even smaller mortgages ($5-$10 million) aren’t always possible anywhere but prime property markets.

Ultimately, each of these properties will likely come in at around 50-70% loan-to-value. At the very top of the scale (the $100+ properties) an LTV of 60-70% is far more likely than 50% LTV as this will help lenders mitigate the potential risk of such a large mortgage. 50% LTV can be possible in the world of ultra-large mortgages, but usually for ‘lower value’ purchases – think in the region of $50-80 million – anything above $85 million will usually see 60%+ LTV will be the norm.

Super-prime mortgages will almost always run through corporate entities of which the owner (or a family member) is UBO, rather than the debt being in the borrower’s name directly. This also opens up the possibility to borrow more as it formalises and streamlines very significant borrowing. The set-up of structures linked to the mortgage will be critical to how easily the property can be financed – both in terms of the entity that is borrowing, and the overall structures. How the entities are set up, managed and administered will also play a part – lenders will usually want to see licensed service providers taking a key role here, as well as involvement from reputed fiscal, legal, and audit providers.

Which Lenders Offer The Biggest Mortgages In The World?

Surprisingly, not only the biggest private banks. At this level, financing is international: an American private bank (or private wealth division of an American bank) may offer a mortgage for a European property, just as a UK-headquartered lender might offer a mortgage for a LA property. Ultimately, the lender that offers the best deal and can structure the deal most effectively in line with expert advice is likely to win the deal. 

While private banks tend to dominate the market for the world’s largest mortgages, there are other lenders that offer significant residential property finance. Bridging lenders are increasingly moving into the super-prime space, offering short-term (1-3 year) finance that allows a buyer to complete a transaction quickly, either before repaying the loan via a liquidity event, refinancing with a traditional mortgage product or, in some cases, selling the property. This latter case is less usual in bridging deals as super-prime property sales tend to be more a marathon than a sprint, with many months or more than a year sometimes required to sell a property, making refinancing via a sale complex to manage. 

There is plenty of lender competition in the super-prime mortgage market, with multiple lenders vying to offer huge finance packages to the best-quality buyers. Lenders will want to see a net worth many times in excess of the property amount (rather than the loan amount), meaning finance for anything more than $85 million will see buyers need to be approaching billionaire status. Ultimately, high-net-worth individuals with quality profiles, good (repeat, steady and significant) income, huge future earning power and little other debt will find they have the pick of the lending market. As long as the property is being purchased at market value and the borrower’s wealth and asset base support the purchase, there’s no limit on how much can be borrowed.

The views and opinions expressed in this piece are those of the author and do not constitute advise or a recommendation, nor do they necessarily reflect the official policy or position of Enness. They are also not intended to indicate any market or industry viewpoints, or those of other industry professionals.