Property prices have fluctuated over recent years however the overall trend tends to be a positive increase.
Higher house prices may be the result of the supply and demand of available property within an area, the reputation of an area improving or local investments resulting in an increase in amenities.
All of which in turn often results in higher value mortgages being required for potential buyers.
In this guide, we will explore the higher lending options available on the financial market including mortgages for £250,000 and above, as well as the application criteria and the process of how to access the financial products.
Lenders Decision Making for Mortgage Applications of £250,000 and Above
Like other financial product applications, there are borrowing criteria set by each lender.
The mortgage application and underwriting process are the same for higher value mortgages as it is with other mortgages, however, lenders may wish to undertake further due diligence and checks due to the increased level of risk involved.
The key factors that a lender will apply to a mortgage application are as follows:
- Income – An applicant’s income level as well as the consistency of income will need to be reviewed by a potential lender. Proof of income will be required to be submitted via documentation such as payslips and P60s.
Lenders will often be keen to accept mortgages applied for by professionals who are deemed to be high earning and insecure roles.
In addition, mortgage lenders will look favourably at applicants who are in permanent employment as opposed to a temporary contract and therefore this is worth considering ahead of making an application.
In addition, during the process when lenders are reviewing an applicant’s affordability, they must also factor in a buffer to accommodate changes such as inflation of bills and interest rate rises.
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The level and type of income will define the value of the mortgage offered.
- Monthly Expenditure – An applicant’s typical monthly expenditure will also be analysed during the process of reviewing a mortgage application through the submission of bank statements. This process is to ensure that affordability checks can be undertaken, ensuring that the mortgage repayments are manageable. It is worth noting that certain types of transactions can raise alarm with potential lenders such as debt repayments to multiple credit cards or store accounts, as well as gambling payments.
- The size of the deposit – The value of the deposit to be put down against the total property cost will calculate the loan to value percentage of the mortgage application. Lenders will consider applicants with a higher deposit as more favourable as this will reduce the risks of lending.
- An applicant’s financial history and current credit score – The applicant’s credit history will impact the outcome of a mortgage application as well as the current credit score. Bankruptcy, CCJ’s or missed loan repayments will severely impact a credit score for many years and therefore should there be any concerns regarding your history of managing your personal finances, it would be worth discussing matters with a mortgage advisor ahead of an application.
- The property details – The property’s value and condition will be assessed during the mortgage application process via a property valuation. There are some types of properties that lenders will not provide finance for and therefore if there are any concerns regarding the condition of the property, it would be worth investigating these before progressing with an application.
- The type of mortgage desired – There are an array of mortgage options available on the market and therefore ahead of an application it would be worth researching what would be most suitable. A mortgage advisor can assist you with this.
What are the income levels required to obtain a higher value mortgage?
This can vary from lender to lender as lending criteria and income multiples can vary.
In certain circumstances, a mortgage advisor may be able to access higher Loan to Income mortgages. Therefore, should your income not meet the current set multipliers resulting in the mortgage value needed, it maybe be beneficial to approach a specialist mortgage advisor.
Can I obtain £250,000 with a deposit of 5%?
Although a higher value mortgage with a low deposit may be harder to find on the open financial market, there will be a handful of lenders that will be willing to consider lending at 95% of the property value, or loan to value rate.
In such situations, it would be highly recommended that a mortgage advisor is approached to assist with finding appropriate lenders as well as seeking the most favourable mortgage terms.
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Can I get a mortgage for £250,000 summary
Higher value mortgages are more common these days due to the increases seen within property prices over recent years. As discussed, there are strict criteria that will need to be met before a lender would agree to offer high-value mortgages.
As with any financial decision, it is highly recommended to seek mortgage advice before making a commitment, ensuring that all terms and conditions are fully understood.
Independent advisors will also have access to the whole of the market, rather than just high street lenders and therefore will often be able to compare a wide range of options across an array of lenders.
It is worth noting that all secured lending will have consequences to owned assets if the repayments are not kept up. These include, but are not limited to, an impact on a person’s credit score and in worst cases, repossession.
Call us today on 01925 906 210 or contact us. One of our advisors can talk through all of your options with you.