Million Pound Mortgages
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Million Pound Mortgages - Do you qualify?
The steady rise of property prices over the years means that million pound mortgages are not as rare today as they once were. Getting a large mortgage of this size isn’t too different from any other – it’s mostly about making sure you meet all the lender’s criteria.
How do I qualify for a million pound mortgage?
Your annual income is a big factor in how much you can borrow from a mortgage lender.
To qualify for a million pound mortgage, many lenders would expect you to earn around £200,000 a year.
If you have a complex income, including discretionary bonuses, irregular earnings or foreign currency for example, many lenders won’t accept these as part of your annual income. Likewise, people whose wealth is tied up in assets often need to seek out private banks to get a million pound loan.
Your outgoings are also important. Mortgage lenders will always look at your income and your spending to make sure that the monthly repayments on your loan are affordable.
What would a million pound mortgage cost per month?
Monthly payments will depend on the interest rate, the term of the mortgage and the size of your deposit.
A million pound mortgage calculator can give us an indication of the costs, though. As an example, a £1m loan on a 25 year repayment mortgage at 3% interest, would cost around £4,700 a month. This is based on a £1,200,000 property with a £200,000 deposit.
What fees are there on a million pound mortgage?
Every lender will set their own fees on a product by product basis. A typical mortgage arrangement fee is around £1,000 to £2,000, but some lenders charge a fee as a percentage of the total loan.
On a million pound mortgage, a 1% Arrangement Fee would be £20,000 – so this is something to pay close attention to. In addition there may be Valuation Fees, which can reach £1,500, and Booking Fees – often a flat charge.
You would need to budget for Stamp Duty too. From October 2021 the Duty due on a £1,000,000 property would be £43,750.
Can I get a million pound mortgage on Buy to Let?
With a Buy to Let mortgage lenders will base the loan amount on the potential rental income for the property. You usually need to cover 125% of the monthly repayments on your mortgage from your tenants’ rent. Researching rental values in your chosen market is crucial, as in some parts of the UK rental costs have not increased as quickly as house prices, making Buy to Let unviable.
Note that Buy to Let mortgages require a higher deposit – usually a minimum of 25%, although private banks may be more flexible on this. Some lenders offering Buy to Let mortgages will set a minimum income requirement.
Can I get a million pound mortgage on an interest only basis?
Many Buy to Let borrowers opt for interest-only mortgages as these have lower payments, meaning more rental profit. Residential interest only mortgages do exist but are less common.
At the end of an interest-only mortgage term you need to repay the full amount borrowed. This is the key difference: with a capital repayment mortgage, the home is fully yours at the end of the term.
Because of this, interest-only lenders will want proof that you have a viable ‘exit strategy’ to repay the loan. You could provide details of investment portfolios, equity in other property or other strategies to raise the amount due.
How can a Mortgage Broker help?
Here at the Mortgage Mum, we have helped many clients find mortgages over £1 million. We support anyone who needs to compare their mortgage options across high street lenders and specialists.
Whether you are a First Time Buyer, a portfolio landlord or seeking a remortgage we will explore your specific situation and find deals to suit you. On a million pound property, our attention to the details could save you much time and money.
We will take into account options with private finance providers as well as high street banks and building societies to achieve your property goals. Contact us today to see how we can help you.
Your property may be repossessed if you do not keep up with your mortgage repayments.