How Much Does A Million Pound Mortgage Cost
In the last 12 months borrowing has never been cheaper with the Bank of England base rate currently sitting at 0.1%.
Since the beginning of the pandemic banks and building societies have been able to secure super cheap money from the BOE following the launch of their Term Funding Scheme designed to boost the economy. With banks able to borrow at 0.1% they can pass on this low cost money onto mortgage borrowers.
The good news for UK residents and expats is that borrowing a million pounds or more has seen many lenders reserving their best rates for larger loans.
What will my monthly repayments be on a £1 million pound mortgage?
As with all borrowing it will depend on your circumstances.
For a new residential property purchase assuming you have a 40% deposit the cost of a £1 million mortgage on a repayment basis over a 25 year term would be approximately:
2 Year Fixed Rate:
£3,768 pm on a current top 2 year fixed deal. If you opted for an interest only basis the cost would be £833.33 pm. This would be the monthly cost payable for 26 months after which you would revert back to the lender's standard variable rate. A product fee of £1,249 would apply which could be added to the loan. Early repayment charges apply.
5 Year Fixed Rate:
£3,870 pm on a current top UK deal. If you opted for an interest only basis the cost would be £1,017 pm. This would be the monthly cost payable for 63 months after which you would revert back to the lender's standard variable rate. A product fee of £1,249 would apply which could be added to the loan. Early repayment charges apply.
The above mortgages are available currently at the time of writing subject to income affordability and your credit status.
How do I secure a large mortgage over a million pounds?
Whether you are refinancing or buying a new property for residential or investment purposes, the criteria a lender will use will depend on a number of factors.
If you have a standard employed income which supports repayments then that opens up a large range of lenders to choose from. More complex income e.g. where you are self employed or where income comes from more than one source e.g. foreign income or company earnings may require a different approach.
Many lenders are comfortable structuring a large loan mortgage over £1 million where a high percentage of overall income is made up of bonus and dividends - lenders will typically look at your requirements on a case by case basis.
As well as existing properties, other assets such as personal pensions and listed security investment portfolios can be taken into account when determining the level of finance you can access.