Regardless of how large your income is, the reality is that most private and investment banks have clear lending caps when it comes maximum loan to values (LTV) on mortgages over the £1million mark. Generally speaking, private banks will cap out at approximately 65% LTV, in order to mitigate their own lending risk.
This makes it very problematic to secure a LTV over this limit. I recently navigated this hurdle for a client who was looking to purchase a property valued at nearly £4million. My client had both a large basic salary and significant bonus income, which meant he would confidently be able to service a large mortgage. However, he only wanted to place a deposit of 15%, meaning he needed an 85% LTV mortgage.
Naturally, no high street lender would consider a case like this—but the majority of private and investment banks were also unable to help, meaning a creative solution was required.
Fortunately, I have an excellent relationship with one of the only lenders on the market who is currently offering large mortgages up to 85% LTV. This lender was prepared to offer my client a loan on an interest-only repayment basis, providing my client would make ‘bullet repayments’ every year, which would slowly bring my client’s facility down to 65% LTV.
They were also able to take a view on his bonus income, taking 100% of it into consideration. Many lenders will only take a portion of bonus income when calculating affordability as it is not considered a stable income. I negotiated exclusive rates for my client, meaning he could take out the loan on at 2.44% on a 2-year fixed basis, or 2.84% on a 5-year fixed-term mortgage.
I was also able to assist my client further by directing him to the Enness Insurance team. As he was currently paying a large premium for his life insurance cover, our in-house Insurance brokerage is now working with him to find a better value policy.
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