Navigating Large Mortgage Loans for London Properties

The London property market remains highly lucrative to ultra-high-net-worth individuals (UHNWIs). The city is an exception to the broader UK housing market, yet even the wealthiest buyers still struggle to get the most favourable mortgage deals.

London is amongst the most highly competitive markets in the global real estate sector. Meaning that even UHNWIs can find navigating the market and securing a mortgage challenging and time-consuming. However, with the proper assistance, you can secure a large mortgage loan on London property with advantageous finances, even if you aren’t a UK national.

The State of Property in London

London is an appealing location due to its global connections, booming business and financial markets, educational opportunities, and rich international culture. As such, the London property market remains as strong as ever and continues to appeal to foreign investors.

While UK house prices fell for the first time in six months in March 2024, according to Halifax’s house price index, Land Registry filings show that London’s luxury property market shows no signs of following suit. The city saw 61 luxury properties valued over £10 million change hands in the first six months of 2022 – the highest rate in a decade.

Despite that demand, the mortgage process can be complex, even for wealthy investors with sufficient funds. That’s often because private banks and niche lenders offer the most favourable agreements on properties that require you to borrow more than £1 million. Therefore, future homeowners, investors and financial advisors must understand how to get the best deal possible on large mortgage loans.

What are Large Mortgage Loans?

Large mortgage loans enable investors to purchase or remortgage high-value properties. They offer flexible terms, such as lower loan-to-value ratios, the utilisation of income from various sources, and the structuring of payments to align with cash flow from irregular income sources.

UHNWIs have several options for securing a large mortgage loan, including:

• Repayment Mortgages: With a repayment mortgage, the interest and capital repayment are paid monthly. You’ll have paid off the agreed loan value when the repayment period ends.
• Interest-Only Mortgages: An interest-only mortgage requires paying off the interest during the term. The initial agreed loan value is still due in full at the end of the defined repayment period. This agreement benefits you with lower monthly expenses, but you’ll need a bulk payment strategy when the loan ends.
• Fixed Rate Mortgages: A fixed-rate mortgage guarantees agreed monthly payment rates for the agreed loan repayment period.
• Variable Rate Mortgages: An alternative to fixed rates is a variable rate mortgage, in which the monthly payment varies based on market rates. This option may offer favourable rates at the start, but there’s a risk that your costs could increase over time.
• Offset Mortgages: With an offset mortgage, interest is charged based on the difference between your loan balance and the amount of money in a linked offset account. This allows you to reduce the interest you pay, work towards other financial goals and guarantee access to cash flow.
• Part Interest Part Repayment Mortgage: A flexible part interest part repayment mortgage enables you to repay an agreed amount of your loan while making interest-only payments. This option gives you the best of both worlds, paying off the mortgage while covering the interest. You’ll still owe a lump sum at the end of the agreement, so you’ll need a plan to pay it off.
• AUM (Assets Under Management) – Some lenders, especially private banks, provide better rates if the client brings some assets under their management. By doing so, the client can potentially secure more favourable mortgage terms as a part of a comprehensive financial relationship.

How to Secure a Large Mortgage Loan

To secure a large mortgage loan in the UK, you must meet specific eligibility criteria. Unlike typical lenders, our approach is bespoke, tailored to your unique financial situation and credit history. Private banks and niche lenders we work with will conduct a thorough review to determine your risk and ability to repay the loan, ensuring a personalized solution that aligns with your financial goals.

Loan qualification with lenders requires you to meet criteria such as substantial assets and proof of income, a strong credit history, demonstrable collateral and property portfolio, and a low debt-to-income ratio.

Securing a large mortgage loan will also be reliant on factors like:

• Deposit Requirements: Most large mortgage loan lenders will require you to pay a deposit between 10% and 40% of the property’s total value. Higher deposits can lead to lower interest rates and better loan conditions.
• Interest Rates: As alluded to above, it’s possible to secure fixed or variable interest rates on a large mortgage loan. It’s crucial to assess how fluctuations in interest rates may affect your repayments and long-term finance portfolio.
• Assets Under Management (AUM): AUM is the market value of financial investments you own or manage. Some lenders may require you to keep some assets under management before granting a large mortgage loan. Financial firms typically consider holdings like bank deposits, cash, and mutual funds.
• Dry Lending: Dry lending means providing a large mortgage loan without the condition of AUM. Lenders may consider your ability to retain assets and broader financial situation into consideration during the credit underwriting process.

Your Large Mortgage Lender Options
In the UK, there are requirements you must fulfil in order to be eligible for a large mortgage loan. Our strategy is tailored to your specific financial condition and credit history, unlike that of traditional lenders. We work with a range of bespoke lenders, international lenders, and private banks that specialize in accommodating foreign income, expats, and foreigners. These lenders also accept complex structures like BVI and SPV, ensuring a personalized solution that aligns with your financial goals.

Bespoke Lenders:

Bespoke lenders provide highly tailored mortgage solutions that fit unique financial situations and goals offering flexibility that mainstream lenders often cannot match. These lenders are ideal for clients with complex income streams, significant wealth, or unconventional financial profiles.

International lenders:

International lenders serve clients with assets or financial interests across borders by providing mortgage products that take into account international assets and income since they are knowledgeable about cross-border financial restrictions. They offer services to foreign nationals, expatriates, and anyone with overseas real estate holdings. Due to their global presence, international lenders are able to provide competitive rates and enable the acquisition of real estate in several currencies for their clientele abroad.

Private Banks:

Private banks offer exclusive mortgage solutions to high-net-worth individuals (UHNWIs). These banks provide a high level of personalised service and access to a wide range of financial products. Private banks often offer better mortgage terms to clients who maintain a significant amount of assets under management (AUM) with the bank. By integrating mortgage solutions with wealth management services, private banks ensure that clients receive comprehensive financial planning and advantageous borrowing terms.

Lenders Who Accept Complex Structures (BVI, SPV, etc.):

These lenders understand the advantages of storing assets in offshore companies or through structured vehicles, as well as the legal aspects involved. They offer mortgage packages that let customers take use of these arrangements for effective asset protection, investment strategies, and tax planning. This type of lending is particularly useful for property developers, investors, and individuals with intricate financial portfolios.

Secure Your Large Mortgage Loan With Hectocorn

Securing a large mortgage loan can be challenging and you’re unlikely to secure the best possible deal by speaking to high street lenders. However, you can find lenders that will meet your mortgage needs and provide bespoke financial agreements, regardless of your circumstances. But to do that, you must work with an expert broker who provides bespoke mortgage products and has established relationships with specialist lenders.

Hectocorn helps ultra-high-net-worth individuals secure the best rates on UK mortgages. Our real estate expertise and close relationships with specialist niche lenders enable you to access finance options that are impossible to find on the high street, and you’d struggle to secure individually.

Our team of mortgage brokers is dedicated to understanding your financial situation and long-term goals. This ensures we secure the best possible UK mortgage agreement with terms that match your monetary requirements. We operate as your partner through every transaction stage, helping you work with the most appropriate lender and troubleshoot any complications.

Find out more about the best large mortgage loan for you by reading our investment mortgage options and mortgage guide. And speak to Hectocorn’ s team of mortgage experts by getting in touch.