How To Get A Multi Million Pound Mortgage

27-April-2022 14:40
in Private clients
by Jennifer Stevenson
Everything You Need to Know to Get a Million Pound Mortgage

There’s increasing demand for high-value properties in the UK, not just in the capital and the commuter heartland of the southeast.

This property sector has done exceptionally well from 2020 through to 2022. And Property News UK says that million-pound homes have been outperforming the rest of the market in the UK, with many wealthier buyers looking to move from luxury apartments to more significant properties with gardens. 

In This Guide:

The big-growth markets for big mortgages
What are the issues with getting a million-pound mortgage?
What salary do I need for a million-pound mortgage?
What deposit do I need for a multi-million pound house?
How can I maximise my borrowing on a million-pound-plus property?
Going to a private bank for a million-pound mortgage
Foreign nationals buying prestige UK properties
Specialist brokers for £1M+ property purchases 

The big-growth markets for big mortgages

Contrary to popular misconception, not all of these big price-ticket homes are in the greater London area. Nearly half of the highly sought-after million-pound properties were outside London at the end of 2020.

Beyond London, the most popular million-pound-plus markets are Norfolk, Wiltshire and Cornwall. Prices jumped 244% in Norfolk, 174% in Wiltshire and 165% in Cornwall.

The hottest millionaire suburbs are Henley, Hackney, Tooting, Stoke Newington, and Balham within the capital.

How much do you need to buy a London home?

According to research by Santander, it’s predicted that one in four London homes will cost £1 million or more by 2030.

You need to spend considerably more than a million to buy anything more than a 2-bed apartment in a reasonably central location, as Londoners know.

You’ll need £2.5M to buy a three-bedroom terraced house in Kensington, £4.3M to buy a four-bedroom house in Chelsea or Primrose Hill, and £6.5M to buy a detached 5-bedroom house in Twickenham.

Multi Million Pound Mortgage Case Study

What are the issues with getting a million-pound mortgage?

1 You need a lender with an appetite for this market

For banks, building societies and private lenders, the major issue with lending on a multi-million-pound property is the risk of having all their eggs in one basket.

You may be looking at a prestigious property in short supply, in the kind of location that will always be desirable for high-end investors.

But for a lender, this is a riskier proposition than mortgaging a portfolio of diversified properties that includes lower-priced neighbourhoods that are affordable to more buyers.  

To get the finance you’re looking for, you need to be matched with a lender whose underwriters are experienced in this market area. Specialist lenders will be genuinely willing to lend at this level so they won’t be pricing their mortgages defensively.

Which banks offer million-pound mortgages?

The majority of the UK’s familiar high-street banks offer mortgages of at least £1M. A handful will accept up to £10M mortgages - often by referral to their large loan teams or the private bank within their group (such as NatWest’s relationship with Coutts).

But the availability of mortgage “products” doesn’t necessarily mean this will be the best lending for you.

It may well be that the customised approach of a private bank, making individualised, case-by-case decisions, may suit you better.

Some private lenders specialise in rural properties, for example, where there is considerable acreage in addition to a home and possibly additional outbuildings and rental units.  

This is where the advice of a mortgage broker is invaluable. Their job is to be looking across the whole of the lending market for your property finance, including small and large lenders, high street and private banks.

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2 Cost of borrowing vs flexible mortgage terms

Every client will be looking for the cheapest possible rate on their mortgage finance.

  • But the lowest rate is of no use if a lender won’t meet the loan-to-value (LTV) you’re looking for.
  • Or if they can’t offer the length of fixed-rate term you want or can’t take into account a range of assets and earnings for your application.

High street lenders usually offer the most competitive rates. But they generally have a standardised decision-making procedure: you fit or don’t. 

Specialist lenders and private banks are ready to take a more bespoke approach. They may be willing to consider your future financial situation, a range of multiple wealth sources, and your current earnings.

Finance to buy prestige UK property

What salary do I need for a million-pound mortgage?

At this level of borrowing, conventional salary formulas don’t apply.

But as a rule of thumb… it's worth working on an income multiple cap of four times your annual salary (which is lower than the 4.5x or 5x salary mortgage you might be able to get from a high street lender for a lower value property):

Property value = £1M

15% deposit = £150,000

85% LTV mortgage = £850,000

Annual income required: £212,500             

In addition to the substantial level of earnings required, the monthly cost of servicing a capital repayment mortgage of this size could be upwards of £4,000.

This is where an experienced broker can help you with alternative ways of structuring the borrowing you need.

It is possible to access borrowing at 5x or 6x salary from high street lenders for specific groups of borrowers with solid prospects for future earnings (read our blog: Can I Get A Mortgage For 5 Or 6 Times My Salary?).

What deposit do I need for a multi-million pound house?

Most high-street banks will be looking for substantial down payments on million-pound-plus mortgages to reduce their loan exposure.

Most lenders look for at least 25% deposits, with the cheapest mortgage deals being offered for 40% deposits. Only a handful of high street names are willing to go as low as 10% deposit mortgages.  

While you're here, see our complete guide on HNW mortgages and how to secure one

Consideration of your future earnings for a large-mortgage application

Private banks may be more willing to stretch to the highest level of borrowing you need, offering up to 95% LTV for applicants they want to build longer-term relationships with and whose future earnings they can consider.

You may be working in a sector they understand well, where they can confidently predict future earnings:

  • Banking
  • The legal profession
  • Elite sportspeople
  • Musicians and performing artists

Mortgage for multi-million pound country estate

How can I maximise my borrowing on a million-pound-plus property?

If you want to put down just a 5% deposit to maximise your buying power or retain funds for renovations, a private bank will likely be your best option:

  • Your broker may propose an interest-only rather than capital repayment mortgage to reduce repayment costs
  • For applicants with “lumpy” remuneration packages, including substantial bonuses, lenders may look favourably on borrowing extended to 95% LTV if you can make significant capital repayments within the first two to five years
  • Standard mortgages usually allow a maximum 10% overpayment per year during the first fixed period.
  • But a specialist mortgage will allow you to make large capital repayments without penalties

Securing a large mortgage against additional assets

You may also have other assets we can draw upon to extend your borrowing power, such as:

  • Rental properties (business or residential)
  • A holiday home
  • A boat/yacht
  • Classic car collection
  • Major artworks
  • An investment portfolio

Using Lombard lending to extend your borrowing

This type of lending, usually available to private banking clients, allows you to use your liquid assets as collateral against your mortgage borrowing. You can do this at a lower cost than securing against illiquid, physical assets like property that can take more time to sell. Here are some collateral examples:

  • Stocks
  • Bonds
  • Life insurance plans
  • Other investments

Going to a private bank for a million-pound mortgage

Here are some advantages of private banks for this scale of borrowing:

  • They can consider complex income from multiple sources
  • Along with projected future earnings, rather than just current earnings
  • And entrepreneurs who may have a business to sell in the future

The essence of private banking is its emphasis on relationship-building and developing an integrated understanding of a client's entire financial situation.  

In the past, this might have involved an Assets Under Management requirement to move at least 50% of your holdings across for them to manage.

Clients can assess the pros and cons of an integrated service and may decide that it suits them. But “dry lending” is now commonly available from private banks with no obligation to transfer assets.

  • The ability to offer lending at an extended LTV may be a major attraction of private banking.

  • But it will come at a higher cost, and it’s vital that you get good advice on transitioning away towards more competitively-priced long-term borrowing as soon as feasible.

  • This may be via a remortgage to a lower LTV loan with the private bank once substantial capital repayments have been made.

  • Or, the best deal for you might then be available on the high street – which is when using a broker offering whole-of-market advice is crucial.

Buying prestige Georgian property in Bath

Foreign nationals buying prestige UK properties

Overseas buyers are attracted to the UK property market as a haven for their capital.  High-calibre properties allow them to acquire the total asset value they‘re looking for without the additional costs of multi-property ownership.

  • UK lenders are very willing to work with HNW overseas buyers. An experienced broker can advise on which lender will best match your requirements.
  • UK mortgage brokers and private banks experienced in working with overseas clients can also advise on your eligibility for the Tier 1 Investor Visas for buyers of property valued at £2M+.

Buying a £1M+ investment property

Prestige UK properties are sought-after investments, frequently retained as the “jewel in the portfolio” as a reliable store of capital and generating solid returns.

Multi-million-pound buy-to-let mortgages are available at competitive rates for well-qualified investors. Still, you'll likely need advice on the lender with the best terms for your circumstances.

Million Pound Mortgage Example

Specialist brokers for £1M+ property purchases

You will want an experienced high net worth mortgage broker with extensive knowledge of the total lending market for financial decisions at this scale.

It’s about understanding both private banking sector and high street lending, and looking down the road to take care of your long-term interests. We’re not tied to any one lender.

James Caldwell, Director, Clifton Private Finance

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Give us a call at any time that’s convenient for you to set up a detailed discussion of your needs:

0203 900 4322

More about our multi-million-pound mortgage service

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