How To Get a £1 Million Mortgage

As house prices continue to rise year-on-year, so does the demand for £1 million or more mortgages.

Whereas once they were rare commodities only handled by specialist private banks, they are now more widely available from regular high street lenders.

But what are the criteria for securing a million pound-plus mortgage? Who can get them, and do they work like every other mortgage?

This guide will take you through the details of what’s involved and shed light on big money borrowing.

Can you get a mortgage for £1 million or more?

The simple answer is yes. Many lenders are willing to offer up to, or above, £1 million to house buyers.

However, with significant sums of money involved, the more complicated answer is yes, but only if you meet the stringent affordability and eligibility criteria necessary with high-value mortgages.

Due to the complexity and pitfalls involved, many borrowers looking for large mortgages turn to brokers who specialise in this type of lending to boost their chances of success.

Where can you get one?

Nowadays, both private banks and conventional high-street lenders provide mortgages of £1 million and over and also offer products to high-net-worth customers who need to borrow significantly more than this.

However, their approaches are very different, and both have advantages and disadvantages.

It’s worth establishing which type of lender is best for you before you apply….

High street lenders

Many building societies and major banks offer £1 million mortgages, and some have a specialist team for such applications.

That said, some customers find that regulations are too rigid. For example, loan-to-value rates are capped – usually at about 70-85% – and cannot usually be overridden, making securing these mortgages harder.

While some borrowers might find this impedes their application, some might like the fact that high-street lenders’ straight-laced processes are easy to understand and apply for and will undoubtedly cost less in fees.

A word of caution, though: You should always check the entire market before approaching a lender directly, as limiting yourself to just one range of products might result in an unfavourable deal.

Private mortgage providers

If it’s flexibility and bespoke options you’re looking for, this is where private lenders come into their own.

When it comes to high-value lending, lenders are able to take more risks and judge each applicant based on their unique financial circumstances. These tailored lending terms and pricing models are favoured over strict, immovable requirements.

This type of lending means your application will be assessed on a case-by-case basis, with a better chance of factors such as bonuses, shares and assets being taken into consideration, as well as if you have irregular income streams, if your income is from abroad, or if you’re self-employed.

While you will pay more in fees, you will receive a high-calibre service from professionals who specialise in this area. This could also result in a more efficient process when it comes to securing a deal. Securing a higher loan-to-value ratio or getting an interest-only mortgage might also be more feasible.

How to get a £1 million+ mortgage: Step by step

Here are the steps to follow to get a mortgage of £1 million or more…

Step 1: Prepare your documents

Firstly, ensure you thoroughly check that all of your official paperwork is collected and in good order. You’ll need plenty of proof, certificates, statements, and other documentation, along with the level of scrutiny that comes with a mortgage of this size.

You can find a complete list of the documents you’ll need in our mortgage applications guide.

Step 2: Sharpen your credit reports

Your credit history still matters, even if you have a generous income that sufficiently covers the repayments. Remember, it’s all about risk for lenders, so getting approved and reasonable interest rates depends on your credit score being the best it can be. Look into it and make sure it’s up-to-date with no mistakes.

You can download your credit reports in our guide.

Step 3: Speak to a mortgage broker

Getting matched with the right broker experienced in large mortgages is crucial from the beginning. It will save you time, money and unnecessary stress.

We work with brokers who specialise in large mortgages, high-net-worth lending, and private mortgages. We can match you with your ideal advisor for a free, no-obligation chat today.

Eligibility criteria

Like with every mortgage application, your eligibility will come down to these main factors:

• Affordability: High street lenders usually offer the same terms as every other mortgage. That is, they lend 4.5x your basic salary, reaching up to 5.5 times in some cases. A few lenders might also consider a percentage of an annual bonus but not the full amount.
• Deposit: Most traditional lenders will have a capped loan-to-value restriction once they reach £1 million, such as 75-80%, so at least a 20% deposit is necessary. However, if your credit rating is strong, you could be granted a 5-10% deposit percentage. The higher your deposit, the better rate of interest you will get.
• Credit history: As well as counting for whether you’re eligible in the first place, your credit report will also define your monthly repayments. This is down to the degree of risk that a lender might assume. If you have bad credit, there’s a chance you might need to find a specialist lender.
• Property type: How ‘regular’ your home you’re seeking a mortgage on is considered. The more ‘irregular’, the more risky lenders deem it as it could be more costly to insure and harder to sell.

What if you have a high net worth exemption?

If you qualify for the high net worth exemption – e.g. if you have an annual income of at least £300,000 or assets worth £3 million or more – the right mortgage lender can offer you a bespoke deal where the usual lending criteria don’t apply.

You could borrow more than £1 million under the following circumstances…

• Based on income multiples of 7 times salary or more
• Bespoke rates and terms negotiated from scratch
• With more discretion and privacy
• Mortgages secured against assets, such as a stocks and shares portfolio

Remember that you will need a private mortgage lender to get a bespoke high-net-worth mortgage deal, and these lenders are usually only accessible through a specialist broker.

How much your monthly repayments could be

Here is a hypothetical example of how much monthly repayments would be if the interest rate was 4% and the term length was 25 years. If any of these variables change, so will the monthly sum:

Interest-only mortgages on £1+ million properties

Some lenders will offer high-value interest-only mortgages, but they will be harder to secure, and lending options might be as low as 50% loan-to-value, although some will go up to 70-80%.

While these mortgages have lower monthly repayments, you’re not paying any capital from the loan, so you will be expected to prove a viable strategy for repayment when the balance is due at the end of the term.

Buy-to-let mortgages on £1+ million properties

Large buy-to-let mortgages are considered higher risk, and in most circumstances, you will need a larger deposit than is standard, with 25% being the average benchmark.

As with residential mortgages, applicants will be vetted for affordability and income, but rental yields may also be taken into consideration – 125-130% is generally the minimum – and your financial profile, assets, and incomes from salary, pensions, bonuses, or capital could sway private lenders.

Get matched with a broker who specialises in £1 million mortgages

The brokers we work with specialise in million-pound mortgages, high-net-worth lending and private mortgages.

They know this section of the market inside out and help our customers get where they need to be without fuss, unnecessary costs, and the most competitive deals they qualify for.

They have access to the entire market – including private lenders who aren’t usually accessible to the general public – and know the right places to look for our clients.

Contact us today at 0330 822 0505 or make an enquiry, and we’ll set up a free, no-obligation chat between you and your ideal broker today.