How can I leverage my savings to secure a large mortgage?

How can I leverage my savings to secure a large mortgage

Recent uncertainty in global markets has turned Brits into a nation of savers, with latest figures showing households saved an all-time high of 29.1% of their disposable income between April and June 2020. That’s more than double the previous record of 14.4% set back in the early 1990s.[i]

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So, how can your savings help you to get a large mortgage? The obvious answer is that they can help towards the cost of buying real estate, decreasing the loan to value (LTV) ratio and increasing the amount of capital in your property. However, many of our clients require an element of liquidity in their portfolio and understandably don’t want to cash in or invest the entirety of their savings in property, especially in times of uncertainty when they’d like the option to call on capital reserves.

 Our recent case is a prime example of this scenario at work. Our clients had an £850,000 mortgage which was coming to the end of its term; however, their income wasn’t sufficient to service the debt. Despite this, the clients had substantial savings.  

 Solution

Our Associate Director Paul Fredericks approached a lender with a robust lending proposal, clearly showing that the clients had capital to draw upon, if necessary.

 The lender was happy to take a common sense approach, and did not require the savings to be drawn down, meaning our clients didn’t have to forfeit any of their liquidity. Instead, the lender was satisfied that the substantial savings pot could be used to top up the client’s income, if required. As a result, our clients secured their interest only remortgage on their desired three-year term without having to raid their savings and investments to do so. 

 [1] https://www.thisismoney.co.uk/money/saving/article-8790533/Household-saving-hit-time-high-coronavirus-lockdown.html

 Your home or property may be repossessed if you do not keep up repayments on your mortgage.

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Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Changes in the exchange rate may increase the sterling equivalent of your debt. You may have to pay an early repayment charge to your existing lender if you remortgage. Think carefully before securing any other debts against your home.  

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