It's not uncommon to come across properties that are valued at over a million pounds, and the rise in property costs means that there are more and more properties in this price band. As a result, there are more mortgage lenders who are willing to consider offering mortgages of 1 million pounds or even higher. In fact, you can usually find high street lenders that will cap their maximum loan amount at £2 million. In order to qualify for a higher value mortgage you’ll need to meet certain criteria.
In this guide, we go over everything that you need to know about getting a mortgage for a property worth a million pounds or more. We also cover how getting an experienced mortgage broker can help you get the mortgage you need to buy your ideal property, whether you're buying your first house, moving home or investing in a buy-to-let property.
In this Guide, We Cover the Following Topics:
- Is It Possible to Get a 1 Million Pound Mortgage?
- Where Can I Get a Million Pound Mortgage?
- Why Use a Mortgage Broker for a Million Pound Mortgage?
- What Are the Requirements to Get a 1 Million Pound Mortgage?
- Million Pound Interest-Only Mortgage Options for Residential Properties
- Million Pound Buy-to-Let Mortgages
- How Much Is a 1 Million Pound Mortgage Per Month?
- Interest on a 1 Million Pound Mortgage
- Million Pound Mortgages: Next Steps
Is it Possible to Get a 1 Million Pound Mortgage?
Yes it’s possible to get a 1 million pound mortgage. Of course, there are still criteria and requirements you’ll have to meet, and each lender has different criteria, which might be stricter for larger mortgages. For example, you’ll need to have sufficient income to make your mortgage repayments and may have to provide a larger deposit than you would for a smaller mortgage.
Use our calculator to gauge how much you can borrow based on your income.
Where Can I Get a Million Pound Mortgage?
More high street lenders offer 1 million pound mortgage options today than they used to, simply because property prices are higher so it’s a more common requirement.
If you require a mortgage of above 2 million pounds, or 3 – 5 million pounds then you’ll likely find a mix of high street lenders and other more specialist lenders (like private banks) available.
In fact, a lot of high street lenders even have premier banking rates for people looking to borrow over 2 million pounds but in order to qualify you would need to open a current account with them.
Why Use a Mortgage Broker for a Million Pound Mortgage?
Navigating the mortgage process can be time-consuming, stressful and downright tedious in any situation, let alone when you’re looking for a 1 million pound mortgage or more. As an experienced independent mortgage broker, we regularly work with high net worth clients and cater to their busy schedules to help them secure suitable lending at the best rates.
We understand income can be complex. We also have years of experience: we know the market, the lenders and their criteria, as well as the process you go through, inside and out. This means we’re able to find you the best deal for your circumstances, including match you with lenders that can consider additional income sources, and just generally make the process as easy as possible.
Mortgage brokers like John Charcol also have access to many more lenders, including banks and building societies that will not work with borrowers directly. This can be essential as it may provide access to better offers or more personalised deals that suit your needs, whether you're purchasing and require a mortgage for a million pound house or remortgaging your existing property.
What the Requirements to get a 1 Million Pound Mortgage?
Different mortgage lenders will have different requirements before approving a mortgage application, so it can be difficult to give an exact answer for what you need when looking for a 1 million pound mortgage. However, there are some things that you can look at ahead of time to ensure that you meet the general requirements.
Income and Affordability
The income and affordability requirements for a 1 million pound mortgage will depend on where you're applying. A high street lender, building society, and other conventional lenders will usually calculate your mortgage affordability based on your income. Most lenders will lend between 4 and 6 times your annual salary. Some will also consider a portion of your regular bonuses. This income needs to be demonstrated with pay slips and work contracts. If you're self-employed and need a mortgage, you’ll need to provide alternative documents to prove your income. Your John Charcol mortgage adviser can direct you towards a lender that consider multiple income streams to calculate what you can borrow. Bear in mind that some lenders may require that the income stream has been received consistently for at least 6 months to show it’s sustainable.
Your income will be weighed against regular expenses you have, such as credit card payments, loan repayments, car financing, childcare, mobile phone contracts, and memberships to work out your overall mortgage affordability. This will determine what you can actually borrow based on what you can afford to pay back each month.
To afford a mortgage of a million pounds, you’ll likely need an annual income of around £225,000 (based on an income multiple of 4.5). This can be your own income or the total of income of all joint applicants.
Deposit
You’ll likely need a deposit of at least 15% - 20% of the property’s value for a mortgage of 1 million pounds and above. The house mortgage deposit requirements are generally larger for higher risk properties when compared with standard properties. This includes bigger loans and 1 million pound mortgages. For example, on a property with 1.2 million pounds, you’ll likely need to provide a minimum of £180,000 in deposit, which would mean securing a mortgage of just over 1 million pounds from the lender.
Credit History
Getting a good deal on your mortgage will also depend on your credit score and credit history. The better your credit history, the more lenders will consider you and the better the rates they’ll be able to offer.
Some of the problems that could make it harder for you to get a good deal on a 1 million pound mortgage include:
- Having no credit history
- A low credit rating or credit score
- Records of late payments
- Missed payments
- Unauthorised borrowing or overdrafts
- History of mortgage arrears
- House repossession
- Defaults
- IVAs (Individual Voluntary Arrangements)
- CCJs (County Court Judgments)
- Debt management plans
- Bankruptcy
- Using too much of your available credit
- A large number of recent hard credit checks
Of course, not all problems are seen in the same way. For example, if you have a recent bankruptcy or a recent property repossession, this will be a major concern to lenders, and it could prevent you from getting a mortgage at all. A single late bill payment would be seen as a much smaller issue, but it could still limit your options for a 1 million pound mortgage.
Million Pound Interest-Only Mortgage Options for Residential Properties
Most residential mortgages are repayment, however it is possible to get a million pound interest-only mortgage on a residential property. Interest-only mortgages usually require a higher deposit than repayment mortgages. The usual limit of interest-only mortgages is 75% LTV (loan-to-value), meaning you would need a 25% deposit, though some lenders will accept lower payments.
In order to be eligible for an interest-only mortgage, you need to provide the lender with a suitable repayment vehicle. This can be more challenging on a residential property as you are less likely to sell the property to repay the loan. However, many higher earners who invest in a range of assets such as wine, art, property, etc. will find that lenders are happy to consider these as suitable repayment strategies.
Million Pound Buy-to-Let Mortgages
Getting a buy-to-let mortgage for a property worth a million pounds or more will be different than getting a residential mortgage. This is because buy-to-let mortgages are seen as a higher risk by lenders since borrowers are more likely to default on buy-to-let mortgages than on residential mortgages.
One of the big differences is the deposit requirement. Deposits for buy-to-let properties are usually higher than for residential properties. You’ll usually be required to put down a 25% deposit for a buy-to-let mortgage, but some lenders may accept a lower deposit of 15% if you have a good income, affordability and credit history.
Another difference is the way in which lenders calculate affordability for buy-to-let mortgages. Lenders will primarily look at the potential rental income you could earn from the property.
The usual minimum projected rental yield for a mortgage is between 125% and 130% of the monthly mortgage payment. Some lenders can also consider top-slicing, which is where they’re able to use some of your personal income to overcome any ICR (income coverage over rental) barriers.
How Much Is a 1 Million Pound Mortgage Per Month?
Your monthly repayments and interest payments on a 1 million pound mortgage will depend on several factors, such as your interest rate and the duration of the loan.
1 Million Pound Mortgage Calculator
You can look at potential larger loan mortgage rates with our best buys. You can also work out your monthly payments by trying our mortgage repayment calculator for a personalised estimate.
Interest on a 1 Million Pound Mortgage
The interest you pay on a 1 million pound mortgage overall will depend on a few things, such as the type of mortgage (repayment vs interest-only), the rate and the mortgage term.
If you opt for a repayment mortgage, your monthly payments will be higher but you’ll pay less interest overall. This is because the interest you’re charged decreases as the outstanding loan amount is paid off.
If you're looking at an interest-only deal for a 1 million pound mortgage, you would pay less per month but more interest overall. Your monthly payments would only be the interest accrued each month but as the outstanding loan amount would not decrease over the term, the amount you pay in interest wouldn’t decrease like with a repayment mortgage.
Million Pound Mortgages: Next Steps
If you're looking for a property with a 1 million pound mortgage, you could benefit from help from one of our experienced mortgage advisers. As a leading UK mortgage broker, John Charcol has experience getting high value mortgages for our clients, even in complex situations. To see how we can assist, get in touch today online or call us on 0330 433 2927.