The loan to value (LTV) of a mortgage is calculated as a percentage of the property’s value. If, for example, you were looking to secure a £750,000 loan with which to purchase a £1million home, it would be a 75% LTV mortgage. Essentially, the higher the LTV, the lower your deposit. In other words, you have less equity in the property.
At the higher end of the market, lenders are understandably reluctant to issue large loans to borrowers who don’t have a significant vested interest in the property itself. Therefore, the panel of lenders willing to consider high LTV mortgages (typically, 80%, 85% and upwards) – particularly over £1million – is heavily restricted.
Often, it is a case of weighing up the pros and cons; a high LTV mortgage can be a wonderful way of securing your dream home, but it comes with higher monthly payments and less favourable rates.
WHAT DO I NEED TO KNOW ABOUT GETTING A HIGH LTV MORTGAGE OVER £1 MILLION?
When it comes to high LTV mortgages over £1million, the panel of lenders willing to service these higher percentages is limited. This is because a small deposit means the borrower has a limited amount of exposure and personal risk, when of course the lender wants them to be as committed as possible. A high LTV implies that the borrower has less liquid cash to hand, giving rise to the worry they might be unable to meet monthly payments. All this means very few lenders are willing to accommodate this higher gearing.
HOW CAN ENNESS HELP WITH GETTING A HIGH LTV MORTGAGE OVER £1 MILLION?
If you are able to raise funds from alternative sources, this may be a good option and is something we can help with as we structure your loan.
If a high LTV mortgage is the path you choose to go down, the good news is there are options out there. We know which lenders offer the best products – in particular, there are some excellent solutions on offer from a private bank with whom we have a strong relationship. In the past, we have secured million pound mortgages at 85% LTV and above by going directly to the decision-makers with a strong, well-presented case.
Often, these banks work on an introduction-only basis, meaning you need a broker to facilitate access to the best rates. Our advisers will quickly get to the crux of your requirements and will let you know exactly what is possible.