Million Pound Mortgages
Million Pound Mortgages – Getting a fair deal
£1,000,000 pound properties were once a rarity, but the steady rise of property prices over the years now mean that million pound mortgages are not uncommon. To get a loan of this size you must meet various requirements, but expert advice makes the process faster and simpler.
How do I qualify for a million pound mortgage?
A mortgage lender calculates the size of a residential mortgage based on how much the applicant earns. Most lenders will offer you around four to five times your annual salary to buy a home.
To qualify for a million pound mortgage, you normally need to earn around £200,000 a year. Some lenders will stretch to a salary of £180,000 if you have perfect credit and a large deposit.
If your income includes discretionary bonuses, foreign income or irregular earnings, it may be more difficult to get a mortgage from a typical lender like a high street bank. People whose wealth is tied up in assets or are paid in irregular sums often need to seek out private banks to get a million pound loan.
What would a million pound mortgage cost per month?
The cost of a mortgage over £1 million will depend on your deposit size, the interest rate and the term of the mortgage. Many mortgages are for 25 years, but you can borrow over any period between five years up to 40 years.
For an indication, you could use a million pound mortgage calculator. A 25 year repayment mortgage at 3% interest, for a home costing £1.2 million with a £200,000 deposit would cost in the region of £4,700 a month. Looking at the same details on an interest-only basis, the monthly repayments are around £2,500.
What fees are there on a million pound mortgage?
Mortgage fees vary widely depending on the lender, and even more so with a large mortgage loan. Sometimes lenders charge a fixed sum of between £1000 and £2000, while others require a percentage of the overall loan.
On a million pound mortgage, a 1% Arrangement Fee is £10,000 – so the way fees are charged is an important consideration.
You should also allow for Valuation Fees, which can reach £1,500, and Booking Fees which are usually a flat charge.
Remember to budget for Stamp Duty too, which reverts to normal from 1 October 2021. From October the Duty due on a £1,000,000 property will be £43,750.
Can I get a million pound mortgage for a Buy to Let house?
While residential mortgages are assessed on the applicant’s income, for Buy to Let mortgages, lenders look at the rental income that the property will generate. You usually need to cover 125% of the monthly repayments on your mortgage with the rent you get for tenants. In some parts of the UK it can be tricky to generate enough rent to make Buy to Let feasible, so researching rental values is important.
Buy to Let mortgages also involve a higher deposit – usually a minimum of 25%, although private banks may be more flexible on this.
Some high street mortgage lenders set minimum income requirements. Private lenders might be more willing to accept bonus payments or money you gain from property, savings or pensions.
Can I get a million pound mortgage as an interest only mortgage?
Interest-only mortgages are fairly common in the Buy to Let sector, but less so for residential mortgages.
An interest-only mortgage has much lower monthly repayments, but you will need to repay the full amount you borrowed when the mortgage term ends. With a capital repayment mortgage meanwhile, you gradually pay off the debt and the home is fully yours at the end of the term.
For an interest-only deal lenders will need proof that you have a viable ‘exit strategy’ – that is, how you will repay the loan. Typical exit plans can include investment portfolios, equity in other properties or selling the security property at the end of the term.
How can Yellow Brick Mortgages help?
Yellow Brick Mortgages are here to make it easier to get a suitable mortgage deal. We will explore your specific situation and research mortgage options on your behalf. We compare interest rates, criteria, fees and costs across the mortgage market. On a million pound property, this could save you a great deal of time and money.
There are many mortgage providers that are only accessible via a mortgage broker. We will consider private finance providers alongside the high street lenders and building societies. That way we can explore a range of options to achieve your goals.
Yellow Brick Mortgages is an appointed representative of The Openwork Partnership, a trading style of Openwork Ltd, which is authorised and regulated by the Financial Conduct Authority. 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.