£3 Million Mortgages

If you have the wealth or income to buy a property for a seven-figure sum, you might assume that any mortgage lender would welcome your custom. However, that often turns out not to be the case on the high street, particularly when dealing with sums up to £3 million or more.

By following this guide you’ll have a clear understanding of where to find the best lenders for larger borrowing, how the application process works and why a specialist broker is essential if you’re to secure the lending you need.

Can you get a mortgage for £3 million or more?

Yes, it’s possible but it can be more difficult through mainstream lenders whose focus tends to lie mainly with approving large volumes of smaller day-to-day home loans rather than bespoke lending such as this.

As a result not all high street banks have the expertise to provide a loan of £3 million, but some do.

The irony is that people who can afford these mortgages often don’t qualify for them due to the rigorous affordability assessments, which can be much more robust and inflexible.

So, mortgages of this size are usually provided by specialist high net worth lenders. These aren’t the big names you’ll recognise from the high street. You’ll need to go through a broker to reach them, but there are many advantages to seeking their help.

Specialist High Net Worth lenders

Specialist lenders include private banks, such as Coutts or Weatherbys, and the private arms of high street banks, such as Lloyds Private Banking or HSBC Private Banking.

Their business model centres around working with a relatively small number of high-net-worth individuals and providing a raft of other services to them in addition to handling their mortgage needs.

These include investments advice and long-term financial planning.

So, with this type of lender, you’ll receive much more personal attention and service. Typically, a dedicated relationship manager will assess your case and (if your application is approved) create the mortgage you need. Your rate will be bespoke, based on your agreed repayment strategy.

Benefits of using specialist lenders

The main advantage of applying to a private lender for a very large mortgage is that you’re much more likely to have your application approved (if you have the income and assets to back it up, that is).

But there are other advantages too:

• More flexibility on income caps, so you can likely borrow more than the standard income multiples (4-6 times) used by high street banks
• Can often offer a higher loan-to-value, so you won’t need to liquidate assets for your deposit.
• Can offer interest-only mortgages as well as repayment mortgages, which allows you to invest your wealth in areas other than property.
• Create a bespoke repayment plan around your income cycle, for example, allowing large capital repayments that coincide with your bonus payments.
• May allow unlimited overpayments, so if your income cycle is irregular, you can overpay whenever you wish.

High Net Worth Exemption

The reason these private lenders are able to offer much more bespoke, flexible terms is down to a special exemption available only to high net worth individuals.

This is available to you on the basis that you have either:

• A net annual income of over £300,000
• Total assets worth more than £3 million

These criteria are set by the Financial Conduct Authority (FCA), the regulator that oversees mortgage lenders and other financial institutions.

It is understood that people at this income level have different mortgage needs than typical consumers and they aren’t well-served by the standard regulations.

So, the FCA allows specialist lenders and high-net-worth individuals (or, more specifically, their brokers) to work together to create a bespoke mortgage with an individual repayment strategy.

Getting a £3 million mortgage with a mainstream lender

There’s two main challenges of applying for a very large mortgage through a mainstream lender. If you’ve applied already and been denied, this will help you understand why.

Income

To qualify for a £3 million mortgage from a mainstream lender, you’d need an income (or combined income, for joint applications) of around £600,000. This is because many lenders cap the loan amount at five times your income, or often less.

If you’re at this income level, you probably don’t receive all your income as a monthly salary.

You may be compensated through bonus income, commission, dividends, or vesting stock. Some lenders will not consider income from these sources as part of their evaluation.

Deposit

Lenders usually require a deposit of between 10-25% of the property value for a mortgage of this size. So, to borrow £3 million, you would also need a deposit of between £333,333 and £1 million.

While you may have access to assets of this value, you might not easily be able to liquidate them for the deposit, or you might not want this wealth to be tied up in property.

Perhaps you have a strategy for growing your wealth through investments of a different nature, with a higher potential rate of return than property.

How to get a £3 million mortgage

Compared to getting a smaller mortgage, the process of getting a £3 million mortgage is more personal. It will involve you, your broker, and a private banker.

From your perspective, here are the three steps involved.

Step one: Choose the right broker

You can’t typically access private lenders without a broker, so this is crucial. They will represent, advise, and support you throughout the process, so it’s important to engage the right person.

You need someone who:

• Has plenty of experience working with high-net-worth clients
• Understands your circumstances and requirements
• Has good relationships with various private lenders
• Can negotiate the best rate and repayment terms for you

Our unique broker-matching service is designed for scenarios such as this.

If you get in touch we will arrange for a high net worth advisor we work with to contact you directly and discuss your requirements further.

Step two: Provide evidence of your assets and income

Private lenders will need to see evidence that you qualify for a high-net-worth mortgage. Understandably, your income may come from a variety of sources and your assets may be spread over many different areas. This can make it somewhat difficult to substantiate, but your broker will explain what evidence you can provide and help you with the paperwork.

Step three: Create your bespoke mortgage

After consulting you on your mortgage requirements, your broker will negotiate on your behalf to establish the terms and rates private lenders can offer .

They will advise on which is the best deal for you and renegotiate if you have any concerns.

How much are repayments for a £3 million mortgage?

As mentioned, you’ll have a bespoke mortgage rate (often in the range of 2-4%). Other details will also be tailored, such as the mortgage term (which can be anything up to 35 years) and whether it’s a repayment mortgage or interest-only mortgage.

Plus, it’s common to make overpayments or scheduled capital repayments besides your monthly repayments, which will reduce how much you’ll pay overall.

These factors will all affect how much the repayments are. However, we can give some illustrative examples of the possible options (which exclude any additional mortgage fees, such as an arrangement fee):

Mortgage type	2% interest rate	4% interest rate
Interest-only, 10 years	£5,004	£9,990
Repayment, 10 years	£27,606	£30,636
Interest-only, 20 years	£5,004	£9,990
Repayment 20 years	£15,179	£18,173

Finding a broker who specialises in high value mortgages

With the pressing need to work with a broker you trust and have faith in, you may be wondering how to find such an individual. After all, only a select number of brokers have the skill and experience to navigate this niche area of the mortgage market.

We work with numerous brokers who specialise in large mortgages and would be happy to match you with someone.

Before agreeing to work with them, you’ll have a free, no-obligation chat to see if they’re a good match for you.

To find out more, simply complete this online form or call us on 0808 189 0463.