From a Coreco perspective, a large loan refers to a mortgage larger than £1million, but that amount could be as much as £25million or even higher.
Be it residential, investment or commercial, there are several opportunities that large loans open up. With the rising house prices in the last decade, one million pound mortgages are more common – especially in London – for residential properties and with confidence growing among property investors, the demand for commercial and investment large loans is also increasing. But with such high-value loans, there are a lot of hurdles to clear before a lender can be confident in you and your security. Here we offer you what you need to know before getting a Large Loan.
Where is your money coming and going?
Predictably, keeping track of your finances is a big part of getting accepted for a large loan. However, if you’re getting a commercial loan or simply have several sources of personal income, keeping track of all sources of income is much more complicated than it would be if you were applying for a regular mortgage. Having several streams of income can be off-putting for lenders. For this reason, it’s a good idea to keep your bank statements, accounts and payslips. In the case of commercial mortgages, be prepared to show your business accounts and projections in order to quell any concerns about the business’ future. If a lot of your cash is tied up in business assets, the lender might also request added security for the mortgage.
You’ll also need to prove to the lender that you can afford a large mortgage. If you have high outgoings, you’ll need to have it documented. If a lender decides that your expenditure is too high they might reduce the amount you can borrow, so you’ll need to demonstrate how you can pay the mortgage.
What is equity in your security?
The value of your current property doesn’t indicate the amount you can borrow, the equity does. Existing debts are a major factor for large loans, especially debts against security. To assure confidence in lenders, it would be ideal to have remaining equity of at least 75% of the value of the property you are looking to buy.
When it comes to security, make sure you know upfront what kind of asset a lender is willing to accept. Some lenders can be particular about what they consider to be viable security, such as only accepting residential properties as collateral.
Consider private banks
Private banks were all but the only places you could get a large mortgage during the credit crunch, and they’re still around today. Private banks are often able to be more flexible to fit your situation and can usually offer better interest rates than high street lenders. Rates can be as little as 2%, but expect the requirement of the transfer of assets under management to secure those rates. It’s not always necessary, but the value of the assets can be as much as 50% of the LTV.
Coreco is well connected to scores of private banks, and we know which lender best suits specific situations, which brings us to our final point on large loans:
Hire a mortgage broker
One consistent aspect of applying for mortgages over a million pounds is that high-street lenders will often make the process more difficult. Since many of them lack the underwriting expertise to provide such a large loan, the process will usually require a lot more paperwork, potentially delaying your mortgage. Any broker will tell you that a large loan will have much better success (and work out cheaper) going through a broker (yes, like us) who has access to private banks and other resources to secure better, more affordable funding.
It’s understandable that this would sound like a hard sell, but we really do recommend that you speak to a specialist about a large mortgage. If there are any uncertainties when it comes to which lender, if one deal is better value than another, what fees you will need to pay, your eligibility, or how to present your application and documents for the best chance of success, a specialist can put your mind at ease. After all, the wrong deal on a large mortgage could cost you or your business many thousands of pounds.
With so much experience in the application process, mortgage brokers know what lenders are expecting in their applications and understand how to calculate the best value for your loan. They’ll also know which lenders charge high arrangement fees, an expense that can be particularly costly when dealing with large loans (tens of thousands of pounds for a £2million mortgage).
The larger the loan you are looking for, the more specialised a lender you’ll need to offer you that mortgage. Dealing with a broker like Coreco will make finding that particular, reliable lender a breeze, and with our contacts and negotiation skills, we can go the extra mile to deliver the best value to you. Whether you want to structure your mortgage offshore, through a limited company or trust, in sterling or in another currency, we can help.
If you’re interested in large loans or mortgages, feel free to contact us and we would be happy to help you out.