Million Pound Mortgages – finding a high value loan

The long term increase in property prices in recent years mean that million pound mortgages are becoming more and more common. But how difficult is it to get a mortgage of this size and what do you need to consider?

How do I qualify for a million pound mortgage?

The main factor in getting mortgages over £1 million is your annual income. Commonly you will need to earn around £200,000 a year – but the size of your deposit is also important. 

Your outgoings are also important. Mortgage lenders will always look at your income and your spending to make sure that the monthly repayments on your loan are affordable. 

Many people who are looking for million pound properties have complex income structures. They might receive discretionary bonuses, irregular earnings or money in foreign currencies, or have funds tied up in assets. This can make it more complex to find a lender and you may need to approach a private bank rather than a high street lender. 

What would a million pound mortgage cost per month?

Monthly repayments depend on your mortgage interest rate, the length of the term and the size of your deposit. 

As an example, let’s imagine someone is buying a £1,200,000 property with a £200,000 deposit. Borrowing £1m on a 25-year repayment mortgage at 3% interest would cost around £4,700 a month. 

The larger the deposit you can contribute, the lower your monthly repayments. You can also unlock lower interest rates with a larger deposit. The best rates are available with deposits of 40% or more.

Can I get a million pound interest-only mortgage?

It is certainly possible to borrow £1million on an interest only basis, and this will considerably reduce the size of your mortgage payments. Often a lender will want a higher deposit in this situation – typically 25% of the asking price.

The important consideration with an interest-only mortgage term is that you will need to repay the full amount borrowed at the end of the term. With a capital repayment mortgage, you will own the property when the mortgage ends.

Because of this, interest-only lenders need to understand how you plan to repay the loan – this is called your exit strategy. You will often need to show evidence of your investments, equity in other property or another way that you will raise the amount due.

What fees are there on a million pound mortgage?

Each lender will set fees on their mortgage products, including arrangement fees, booking fees and a cost for valuation. 

A typical arrangement fee is between £1,000 and £2,000. Generally, higher fees apply to products with lower interest rates. You can usually add the arrangement fee onto the mortgage. Valuation fees can reach £1,500, and booking fees are usually a flat charge of a £100 to £200.

Can I get a million pound mortgage for a Buy to Let house?

Buy to Let mortgages are based on the potential rental income for the property rather than your income and outgoings. Generally the mortgage market looks for the rent to cover 125% of the monthly repayments. 

Million pound Buy to Let mortgages are therefore available as long as you can comfortably generate the right amount of rent. In parts of the UK, rental rates have not increased as quickly as house prices, so Buy to Let may not make financial sense. Private finance opportunities may also be worth exploring in this situation.  

Buy to Let lenders ask for a higher deposit than residential lenders. You will usually need a minimum of 25% of the aksing price. 

How can Mortgages by McAteer help me?

We’ve worked with many clients to find large mortgages of £1m and more. As mortgage brokers, we can compare offers and deals across dozens of lenders and hundreds of products to find a mortgage that suits any specific situation.

When you’re borrowing large sums of money, the rates and fees from your mortgage lender can amount to thousands of pounds. It’s important to explore all the options to make sure you’re getting a competitive deal.

We will explore opportunities with private finance providers as well as high street banks and building societies to achieve your property goals. We are registered in England and authorised and regulated by the Financial Conduct Authority to recommend the most appropriate options. Contact us today to find out more about how we can support you.

Mortgages by Mcateer Ltd is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority. 

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS. SOME BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.