Large mortgage borrowers set to befit as banks and building societies have already committed to providing more mortgages in 2013. Using the government’s Funding for Lending scheme, many lenders are taking advantage of cheap funds in return for agreeing more lending to homeowners and small businesses, which further improves the chances of obtaining a large mortgage.
However, getting a high value mortgage isn’t as easy as it was before the credit crunch. Lenders’ criteria remains tight and new FSA rules will also make a difference to mortgage underwriting. Still, there are plenty of deals available and so we look at four things you can do to maximise your chances of being agreed for your large mortgage loan in 2013.
Save a larger deposit:
“Quite simply, your mortgage chances increase as the amount of deposit you have gets larger,” says Islay Robinson, CEO of London mortgage broker Enness Private Clients. “While there are more 90 and 95 per cent mortgages available than there were a couple of years ago, the best deals are reserved for clients with deposits of 20 per cent or more.”
As well as offering better deals, lenders will often also relax their lending criteria for high value mortgage customers looking for a lower loan to value.
Pay off your debts:
In the past, lenders would often agree a large mortgage loan based on a multiple of your income. Now, however, many lenders use affordability based underwriting and this is set to become more common as new FSA rules start to take effect.
“If you want to maximise the amount that you can borrow it makes sense to repay any unsecured debt such as credit cards or personal loans,” says Mr Robinson, the London mortgage advisor. “If you have a large amount of debt then it will certainly affect the amount a lender will offer on a large mortgage.”
Check your credit record:
The vast majority of lenders will check your credit record before they agree a high value mortgage. While you may not be able to hide a bankruptcy or County Court Judgement (CCJ), you may be able to improve your credit record by taking other steps. You can:
- Obtain a copy of your credit file to ensure that all your details are accurate and up to date
- Correct any erroneous information
- Make sure you are on the electoral roll and are registered at the correct address
- Ensure you do not have any adverse ‘links’ to other borrowers
It is easy to obtain a copy of your credit file from one of the UK’s leading credit reference agencies.
Consider non-traditional lenders:
“Many high net worth mortgage clients don’t realise that there are dozens of non-traditional lenders that have an appetite for high value mortgages,” says Mr Robinson from Enness Private Clients, the million pound mortgage specialists.
“We have excellent relationships with lots of private banks that are keen to lend large mortgages to high net worth individuals. I’d urge anyone looking for a large mortgage to speak to an independent broker. You may find that private banks can offer lending terms far superior to those found on your local High Street,” he added.