How to secure a £1 million mortgage

Needing a £1 million mortgage might seem a rarity. But as property prices are still edging up it’s not as rare as you might think.

In some areas of the south of England, a property valued at seven figures is more common. In fact, one real estate firm has recorded that 1 in 40 homes is now valued in excess of £1 million. 

That might only buy you an apartment in central London, or a big country pile in the North East! Either way, the need for a mortgage of £1 million or more will continue to increase, especially with mortgage interest rates falling.

But how easy is it to secure a £1 million mortgage? And is there anything different to a lower-priced mortgage?

How to secure a £1 million mortgage

Borrowing more than £1 million for a mortgage is a specialist area. At one time, only private banks – such as Coutts – were the only places to offer large mortgages. But  more lenders are offering mortgages in excess of £1 million. And The Mortgage Dog can help buyers who require mortgages of £1 million or more!

To secure a large mortgage you usually need a deposit of at least 10%. Some lenders require a deposit of 20% but it can be up to 40%. You will probably need an annual income of at least £200,000 before you are approved. But some will accept £180,000 if you have a large deposit and a good credit history. 

At the moment (August 2024) your monthly payments are likely to be around £5,900 for a 25-year mortgage and rates at about 5%. 

If you’re thinking about a £1 million mortgage you must remember that:

• The total costs including interest rates, repayments and market conditions.
• Monthly repayments, whether they’re fixed or variable rates and additional fees.
• Other expenses, such as insurance, legal fees and stamp duty.

What requirements are there?

As with any mortgage, the requirements to secure an offer on a high net worth mortgage depends on your circumstances as well as the lender. Income is clearly the most important factor. As we’ve mentioned, you’re likely to need an annual income in excess of 20% – and some require as much as 40%. 

Your deposit is likely to be at least 10% (£100,000 for a £1 million mortgage) but some lenders will require 20%. If you’re self-employed or have income from various sources – such as company earning or income from overseas ventures – then fewer lenders are likely to be willing to make an offer.

They will consider any other assets, including investment portfolios and private pensions as well as other properties. 

What about interest only £1 million mortgages?

If you require an interest only high net worth mortgage it isn’t impossible. But many lenders will require a minimum income and plenty of equity in the property. Interest only properties means just that: you’re paying the interest and nothing else.

So if you have a £1 million mortgage over a 25-year term, you’ll still owe £1 million at the end of the mortgage. Many people will have a large pension that will give them a lump sum to pay the balance of the mortgage. Or they may have business assets or investments that are expected to grow during mortgage term to pay the loan.

You will usually need a higher deposit for an interest only mortgage. Either way, each lender is likely to have a different policy on your requirements.

Should I use a mortgage broker?

Using a mortgage broker isn’t essential but a using a broker offers a lot of advantages when applying for a £1 million mortgage. As fewer high street mortgage lenders are willing to offer high net worth mortgages, a broker’s access to lenders is useful. In fact, brokers often have access to lenders who offer special loans that are unavailable to the general public.

If you would like to know more about £1 million mortgages and would like a free assessment, please contact our team today.