What is LTV?
LTV stands for the loan-to-value ratio. It is always calculated as a percentage: how much you are borrowing compared to the value of the collateral your loan is secured against. Usually, the lower your LTV, the less you will pay for the privilege of borrowing. The higher the LTV, the more expensive your loan is likely to be. Depending on the type of finance you want, there may be caps or limits on LTV, which is set by the lender. In other cases, you may be able to secure up to 100% LTV – a 100% mortgage can be a possibility in exceptional circumstances, for example.
Enness can often broker higher LTV than you will be able to secure yourself, and we will always be working to maximise what you can borrow.
Understanding LTV
For lenders, how much you can borrow is about sharing risk with borrowers. The higher the LTV, the more risk there is for a lender and the less there is to you, the borrower. In high LTV loans, if you were to default on repayments or your security decreases in value, it’s the lender that’s left on the hook. As a result, for every loan a lender writes, they are looking to balance risk – even for the very best and most liquid of clients. The lower your LTV, the less risk there is for a lender, and that’s why any low LTV loan is more competitive in terms of price.
Depending on what asset(s) you will use as security for a loan, there will be different maximum LTVs a lender can consider. Crypto and securities-backed lending will always have a relatively fixed cap on LTV (about 50% and 60%, respectively, although these will change from lender to lender). These caps exist because your lender will need to factor in natural market fluctuations that affect the valuation of your portfolio. Not every lender will offer as much LTV against crypto or securities – Enness has access to the lenders that can consider lending this much against these assets.
For other types of finance, there will be more flexibility on LTV if you have the right profile, which is to say you have significant net worth and can demonstrate excellent and long-term liquidity in concrete terms. High LTV loans can be a possibility if you are looking to raise corporate finance or a mortgage, for example. Exactly what LTV you will be able to secure will depend on the asset(s) you are using as security, your goals and your broader financial situation. The lender may also request that the deal is structured in a specific way in high LTV deals.
What LTV is the best option in different scenarios?
Slightly predictable answer: it depends. Lenders will decide how much you can borrow based on your circumstances, which is as it should be. You will also need to consider risk, your exit and what you are comfortable with carefully and with personalised advice. We can help you work out the best LTV for your specific scenario based on the type of finance you want, your plans, net worth, income and how you will repay the loan.
For example, a high LTV mortgage may be very reasonable and low risk in some circumstances, but they will not be suitable for everyone. As a general rule, high LTV mortgages will be easier to get if you are very liquid (and you can demonstrate that you have been in the past and will continue to be in the future). Lenders will also want to assess your earning power, the stability of your employment and/or additional income, your plans for working (including when you plan to retire if it will impact your mortgage), other debt you have and how your expenses compare to your income.
Just because your financial situation would dictate that a high LTV loan is a possibility, it doesn’t mean you will automatically be able to get one. You will need to present your case and your reasons carefully, even if you think it is obvious that you are a great borrower. Giving concrete facts as to why you want the largest loan available and making a case around these is essential, i.e., future liquidity events that will allow you to exit easily, a very significant net worth/income but little cash saved, etc. Lenders always need to be able to see a solid case to consider you seriously for any high LTV loan – whatever type of finance you want.
How to maximise your LTV
Lender network
If you want to borrow as much as possible, your access to lenders will be a huge factor in your success. Especially in more niche areas (securities-backed lending in particular), we have access to lenders that can often offer higher LTVs than many mainstream players who typically operate with fixed maximums that they can’t deviate from. We have access to niche lenders that offer higher LTVs but which only accept lenders via brokers because we have screened and vetted prospective borrowers and found you would be a match.
If you want a high LTV mortgage, ensuring you have access to the most lenders that can cater to you will be the best path to maximising what you can borrow. As an independent broker that specialises in high-value mortgages and working with high-net-worth individuals, we will be able to approach and negotiate with the lenders that can offer the highest LTV in what can be a specialist part of the market.
Consider using multiple asset classes
Sometimes you will not be able to borrow as much as you want against a single security or asset class. If this is the case, we may be able to help you lend against multiple asset classes. We can look at your assets and the combination of lenders and asset classes that can unlock the capital you need.
As well as property finance (which itself offers different types of finance in the form of mortgages, bridging finance, commercial property finance etc.) there are plenty of other assets you can use as collateral for a loan. Securities-backed finance, crypto finance and luxury asset finance may be options, depending on how much of your net worth is tied up in each.
If you can’t borrow as much as you’d like using one asset class, we will explore using multiple asset classes with you. Here, we won’t focus on a particular type of finance. We will look at how much you want to borrow to achieve your objectives as well as your assets. We can then work out a path forward and the assets you can use as security for a loan to secure finance as efficiently and cost-effectively as possible.
Break down complex situations ahead of time
Sometimes, to maximise what you can borrow, it is helpful to analyse your present situation and finances and see if there is anything you could do to put it on firmer footing. This is especially true if lenders will consider you have a complex background or situation or if there is something that will give them cause to hesitate.
We understand what lenders want to see, where they will have questions and what will create friction. If we see anything that will hamper your ability to maximise what you can borrow, we will explore options and quick fixes with you. Sometimes some shrewd restructuring or presenting not-so-obvious facts will make a material difference to what you can borrow. Some examples of what this might look like:
- If you get a very large bonus on an annual basis or you have a good track record of performance-based bonuses
- Any directors’ loans invested in your business if you are self-employed. We can also work with lenders who can consider dividends and the success of your business based on profits rather than your personal tax returns if you reinvest profit into your business or don’t take a large salary
- Presenting additional income you generate outside your employment (from buy-to-let properties, holiday home rental, etc.) We know the lenders that can consider UK and global income streams
- If you have an unusual income stream – for example you live off an investment portfolio
- If you generate income from (or have equity in) a company you sold or worked for in the past as part of a sale or exit package
- Generate multi-currency income or income in a currency most mainstream lenders would find challenging to consider
Whatever the scenario, we will help you present the very best case to lenders which will maximise what you can borrow as much as possible.
