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£1.5 million mortgage

Author: Myles Robinson - Expert Finance Advisor

Posted: Jun 22, 2022

£1.5 million mortgage loans and lender guide

Although mortgages of up to £1.5 million are not unusual, there are many ways to obtain one. Also, securing the best deal can be difficult. Not many mortgage lenders can offer a million-pound mortgage. Contact us today and we can find you a mortgage broker who can offer a million-pound mortgage,

We have created this guide to £1.5 million mortgages. This guide will help you understand how to apply, the monthly payment, and where to find professional advice from mortgage lenders who specialise in a 1 million pound mortgage.

A mortgage calculator can give you an estimated cost of the monthly mortgage payments.

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Can you get a £1.5 million mortgage?

Yes, provided you meet the affordability for the monthly repayments and eligibility criteria. There are many mortgage lenders that can provide a large mortgage loan of this amount. Specialist lenders are available to help borrowers with mortgages exceeding £1 million. These private lenders operate away from the high streets.

You are a high-net-worth individual, i.e. You may be eligible for a bespoke deal with a private lender if you have an annual income of £300,000.

Private lenders are often not available to the general public. You will need to use a broker to apply for your mortgage.

Contact us today to speak with an appointed representative mortgage lender who specialises in over a million pounds loans.

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How much will your monthly payments be on a 1.5 million pound mortgage?

It all depends on many factors, such as the interest rates, term, mortgage term, amount of your deposit, and whether you choose standard repayment or an interest-only mortgage.

For example, monthly payments on a £1.5 million mortgage may vary by as much as £6,347 per month depending on many factors. Below are the monthly payments for a £1.5 million loan at 3.5% interest.

You should also consider other costs and fees

Each lender is unique. They take into consideration their loan to value guidelines, interest rate and other factors when estimating the repayments on a particular amount.

You should also consider additional fees and costs, such as…

  • Valuation fees
  • Solicitor fees
  • Arrangement fees
  • Book fees
  • Insurance costs that could be incurred

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How much income will you need?

Lenders make an initial assessment of your income to determine if you are able to afford a £1,500,000 mortgage. They then apply a multiple of this figure to get the amount.

No matter how much you are looking to borrow, each lender uses its own criteria to determine what mortgage someone can afford. This means that some lenders may be more generous than others. With larger amounts, these criteria can be more complicated.

Lenders will typically use multiple 4-4.5x earnings. Some will use 5 x earnings while others will use 6x earnings. The table below will give you an idea of how much you can borrow if your income exceeds £300,000.

For example, a £1.5 million pound mortgage would require a 4x income. However, if your lender allows 5x income, your income would only be £300,000.

An income multiple might not suffice to obtain the loan required in certain circumstances, such as when the borrower has limited income and is wealthier than the borrower. An asset-backed mortgage solution might be more suitable in such situations.

Learn more about asset-backed loans in our high-net-worth mortgages guide.

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Criteria for eligibility

In 2014, the Financial Conduct Authority implemented its Mortgage Market Review (MMR). MMR’s main purpose was to ensure UK lenders were more accountable when assessing whether applicants could afford their mortgage repayments.

The FCA provided guidance regarding large borrowing requests that required a more detailed investigation. The MMR clarified when an applicant should be classified as a high-net-worth individual.

MMR was introduced in:

  • Lenders should scrutinize any requests for loans exceeding £500,000.
  • High net worth individuals (HNWIs) will be classified as applicants with an annual income greater than £300,000.

A lender will need information about your net worth and income if you are applying for a mortgage of more than £500,000.

A lender can use what’s called a high-net-worth waiver to allow you to get a loan after reviewing all your assets. Lenders can be more creative in terms of repayment strategies, which could include some of these assets to approve your mortgage.

Requirements for deposits

Your repayments and chances of getting approved for a mortgage will be affected by the number of deposits.

Lenders will look at your loan-to-value (LTV). The lower the loan value, the more risk you are perceived. And the higher the deposit, it will affect the amount of the repayments.

Below are the monthly repayments for a £2 million property. These figures are based on 3.5% over 25 years.

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Get a £1.5 Million commercial mortgage

If you meet the criteria, business mortgages up to this amount may be available. These mortgages can be used for business loans that are usually limited to £25,000. This could include buying a new property to sell.

There are two types of commercial mortgages…

  • Owner-occupier Mortgages: Used for buying a property to be used as a trading base for your company.
  • Commercial mortgages for investment: Typically used to buy commercial property you may be looking to rent out.

One of our advisors can help you determine if you are eligible to receive a £1.5 m mortgage. They are experts in high-value commercial mortgages and have connections with specialist lenders who can help you get the best deal.

Learn more about commercial mortgages.

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FAQ’S

What is the cost of a £1,000,000 buy-to-let mortgage?

A variety of banks and building societies offer £1 million+ buy to let mortgages at extremely low rates.

Barclays for Intermediaries offers one of the most affordable two-year fixed-rate buy-to-let mortgages. The loan amount is a maximum of £1,000,000 and is priced at 1.71%.

After the fixed-rate period, the mortgage will revert to the lender’s 5.24% variable standard rate. The APRC is 4.7%. The monthly payment for a £1,000,000 mortgage on an interest-only basis would be £1,425/month.

We have access to the decision-makers and have a track record of accessing large mortgage loans. As the lenders continue to lure landlords to buy more properties or remortgage, the residential mortgages are becoming less affordable.

Is there a maximum income multiplier for a £1+ mortgage?

We have access to a variety of lenders that offer£1 million+ mortgages. Each bank or building society will use a different affordability calculation to determine the maximum loan amount.

Lenders typically limit loans to four to five times the salary of single applicants. However, some lenders will lend up to 5.5 times the income of joint or single incomes.

Very few providers will offer six-times salary mortgages if applicants have only a small amount of personal debt.

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Is the cost of £1,000,000 mortgages increasing in recent years?

The price of £1 million fixed-rate mortgages has risen, while the sub-1% rates have dropped. The rates of some of the largest lenders have increased, including Halifax’s recent 0.5% increase in its 2-year fixed-rate mortgages.

Fixed rates are still affordable, even though they have increased in cost. Many banks and building societies expect the Bank of England base rates to rise in the coming months.

Is it possible for a £1+ mortgage to be secured interest-only basis?

At least 47 banks and building societies offer interest-only mortgages. Many of these lenders offer £1,000,000+ interest-only rates.

Barclays for Intermediaries and Clydesdale Bank are the largest banks that offer interest-only mortgages. However, smaller lenders such as the Teachers Building Society often offer terms.

Interest-only is an alternative to full capital repayment if you want to lower your monthly payments and plan to repay the mortgage balance.

Lenders are working to attract borrowers and have relaxed their acceptance criteria so that there are more interest-only options available since the credit crunch.

The mortgage rates are generally the same and there is no premium to pay. Clients who are looking for larger mortgage loans with interest-only rates may find lower rates from some lenders.

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To get a larger mortgage loan, will I have to give assets?

High street banks and building societies won’t ask for assets to transfer to them in a mortgage transaction.

Even if you’re looking for a £5 million mortgage, the transaction will be determined based on your income, outgoings, and your ability to repay the loan.

Private banks typically require assets to be transferred before they will approve a loan. We have access to a number of private banks that don’t require assets upfront. However, they might contact you in future to discuss ways they can help you get better returns.

Is it worth getting a bridging loan in order to purchase a property?

Recent data showed that investment property purchases topped the list for most popular uses of bridging loans with 22%.
Traditional chain-breaking was the second-placed purpose, which took 20% of the share. 15% of the loans were used for heavy property renovations, while 7% were used to buy auction properties and 6% were for general business purposes.

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What are the best rates for bridging loans?

Bridging loans allow borrowers to buy properties even if they are unable to obtain a mortgage. They also make it possible to wait for the sale to complete to release funds. Every lender will want to know your exit route and repayment plan.

We have access to the largest lenders in the bridging industry, with a 0.48% monthly rate that can go up to 50% of the loan-to-value. There is a 2% fee for completion and loans of between £75,000 to £15,000,000 are eligible. A smaller deposit will make the price marginally higher.

Access to a private bank that offers £1 million+ bridging loan, with a rate of 2% above the Bank of England base rates. There is a 1% arrangement fee, and there are no exit fees. The lender can also calculate interest daily and offer higher loan-to-values. This product is ideal for larger transactions.

What salary do you need in order to get a £1 Million mortgage?

To determine how much you can borrow, banks and building societies use mortgage affordability calculations.

High street lenders may offer five-times single or joint income mortgages. Applicants would need to make around £200,000 to be eligible for £1,000,000 mortgages.

Only a few banks offer borrowers 5.5-times salary mortgages. Applicants would need to make around £185,000 to be eligible for a £1,000,000 mortgage.

Borrowers who earn more than £100,000. However, the rates are higher.

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Can mortgage lenders accept foreign currency income?

Some banks and building societies accept foreign currency income. This includes, but is not limited to, US dollars, Euros and Swiss Francs.

Lenders may consider currency fluctuations and give a “haircut”, but larger mortgage loans exceeding £1 million in income are acceptable.

Are the £1 million+ mortgages being offset by lenders?

Our network has access to many lenders that offer high-net-worth clients offset rates. These mortgages are ideal for borrowers who have received bonuses or commissions and wish to access these funds.

Let us match you with the right broker for your mortgage

Professional advice is a must if you are looking for a mortgage that exceeds £1.5 million. We work with specialists in large mortgage arrangements and have strong working relationships with lenders. This includes private mortgage providers that you won’t find anywhere else.

Our broker-matching service is free and will quickly assess your circumstances in order to match you with the broker most likely to offer you a £1.5 million mortgage.

We’ll arrange a no-obligation, free chat between you and the broker. Contact us today.

 

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