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Million Pound Mortgages – what to consider
These days a £1,000,000 mortgage is less rare than a few decades ago, thanks to ever-growing property prices. Getting a mortgage this size is a big commitment, and our experts are here to help make sure you get a loan that works for you.
How do I qualify for a million pound mortgage?
The size of your mortgage loan is calculated based on affordability. A mortgage lender will look at how much you earn, your outgoings, plus other assets and any debts in considering how much you can borrow
The general rule is that you might receive around four to five times your annual salary as a mortgage offer, but every lender will have their own affordability calculations. You might find that different lenders offer you a variety of loan amounts.
The way you receive your income is important. If some of your earnings come from discretionary bonuses or foreign income, or your green leaf business solutions annual income is unpredictable, you might find it more difficult to get a mortgage from a standard lender like a high street bank.
People in this situation, or whose wealth is tied up in assets, often need to seek out private banks or other specialist lenders to get a million pound mortgage.
What would a million pound mortgage cost per month?
The monthly cost of a mortgage over £1 million varies. It will depend on the lenders’ criteria, your deposit size, the interest rate and the length of the mortgage.
But an online mortgage calculator can give you a sense of the typical cost. A 25-year repayment mortgage at 3% interest, for a £1.2 million home with a £200,000 deposit costs somewhere around £4,700 a month.
On an interest-only basis, the monthly repayments reduce to around £2,500 per month – but of course this kind of mortgage does not reduce the overall debt.
What fees are there on a million pound mortgage?
Every mortgage lender has their own approach to mortgage fees. Some lenders require a fixed sum of between £1000 and £2000 as an arrangement fee, while others set the fee as a percentage of the overall loan.
A 1% arrangement fee on a million pound mortgage is £10,000 – so it’s important to compare fees carefully for a loan of this size.
You will also need to pay Valuation Fees of up to £1,500 and sometimes Booking Fees apply – these are usually a flat charge.
Stamp Duty is another big cost for anyone buying a high value home. The duty due on a £1,000,000 property is currently £43,750.
Can I get a million pound mortgage for a Buy to Let house?
Getting a million pound mortgage on a property that you want to let out to tenants is not really about your earnings. Buy to Let lenders assess borrowing potential based on the rent that the property will generate.
They usually expect the rent to cover 125% of the monthly repayments on the mortgage. But in some parts of the UK it can be challenging to generate enough rent to make Buy to Let feasible. Researching the rental market in your area is important – or you can speak to an experienced Mortgage Broker like IMS.
You will also need a higher deposit for a Buy to Let mortgage – usually a minimum of 25%, which means £250,000 in cash for a million pound property. You may find that private banks are more flexible about the deposit size.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages
CAN I GET A MILLION POUND MORTGAGE AS AN INTEREST ONLY MORTGAGE?
Interest-only mortgages can be appealing as they offer much lower monthly repayments, but you are not paying back the capital of the loan. Unless you overpay, at the end of the mortgage term you will need to repay the full £1,000,000 you borrowed.
Interest-only lenders will want evidence of your ‘exit strategy’ – how you will repay the loan. Your exit plan might include funds in investment portfolios, equity in other properties or selling a property to cover the debt.
HOW CAN INDEPENDENT MORTGAGE SOLUTIONS HELP?
Our role for any client is to make it easier to find a suitable mortgage deal. We explore your specific situation and research mortgage options on your behalf. We will compare interest rates, criteria, fees and costs across the mortgage market, looking at specialist and private finance providers alongside mainstream lenders. On a million pound property, this could save you thousands.
Independent Mortgage Solutions is a trading style of IMS (Watford) Ltd. IMS (Watford) Ltd is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority and registered in England.
Contact us today to see how we can help you.
Your home may be repossessed if you do not keep up repayments on your mortgage.