Getting a Mortgage for £1,500,000

Mortgages worth £1.5 million and upwards are not uncommon, but there is more than one way to get one, and securing the best deal isn’t always straightforward.

To clear up any confusion, we’ve put together this guide to £1.5 million mortgages.

Here, you’ll learn how to get one, what the monthly repayments will be and where to get professional advice from a broker who specialises in large mortgages.

Can you get a £1.5 million mortgage?

Yes. Assuming you meet the eligibility and affordability criteria for this mortgage amount, there are a range of lenders who can offer a loan of this size.

For mortgages over £1 million, some borrowers turn to specialist lenders, ones who operate privately, away from the high street.

If you are classed as a high net worth individual – i.e. have an annual net income of £300,000 or assets worth £3 million or more – you may qualify for a bespoke deal from a private lender.

Most private lenders are not accessible to the general public, so you will need to use a specialist broker to apply for your mortgage with one of them.

What will the monthly repayments be?

This all depends on many factors such as the interest rate, the term of the mortgage, the amount of deposit you have and whether you opt for standard repayment or interest-only mortgage.

For instance, the monthly repayments on a £1.5 million mortgage can vary as much as £6,347 a month depending on a number of factors.

The monthly payments below are based on a loan of £1.5 million and an interest rate of 3.5%.

The above is for indicative purposes only and you should always check with your lender or one of the advisors we work with for the most up-to-date information.

Other costs and fees to factor in

Every lender is different, taking into account their own loan to value guidelines, interest rates and a range of other factors when estimating the repayments for a specific amount you’re looking to borrow.

There are also additional costs and fees to factor in, including…

• Valuation fees
• Solicitor fees
• Arrangement fees
• Booking fees
• Potential insurance costs

How much income you’ll need

To assess whether you can afford a £1,500,000 mortgage, lenders make an initial assessment based on the size of your income and apply a multiple of that figure to reach this amount.

Regardless of the amount you want to borrow, every lender is different and uses their own criteria when assessing what mortgage somebody can afford, which means that some may be more generous than others.

This criteria can become more complex with larger amounts.

Most lenders will use a multiple of 4-4.5 x earnings, some will use 5 x earnings and a few will go as high as 6 x earnings.

If your current income is in excess of £300,000 the table below gives you an idea of the maximum you may be able to borrow.

the above is for indicative purposes only and you should always check with your lender or one of the advisors we work with for the most up-to-date information.

So, for example, the income required for a £1.5 million pound mortgage based on 4x income would be £375,000, although if your lender allows you to borrow 5x your salary, then your income would need to be just £300,000.

In some circumstances – such as when the borrower is asset-rich with limited income – an income multiple may not be sufficient to secure the required borrowing.

In such cases, an asset-backed mortgage solution may be more appropriate.

You can read more about asset-backed mortgages in our high net worth mortgages guide.

Eligibility criteria

Back in 2014, the Financial Conduct Authority (FCA) implemented its Mortgage Market Review (MMR).

The main focus of MMR was to ensure UK lenders took greater responsibility when scrutinising whether an applicant was able to afford their mortgage repayments.

Within this review, the FCA offered guidance on borrowing requests for large amounts which required much more in-depth investigation.

In addition, the MMR also clarified as to when an applicant should be categorised as a high net worth individual.

Since the introduction of MMR:

• Any lending requests for amounts above £500,000 require closer scrutiny by a lender
• Any applicant with annual income in excess of £300,000 and/or total net assets of £3 million will be categorised as a high net worth individual (HNWI)

As a result, if you need a mortgage for £500,000 or more, a lender will want information on your total net worth, including all assets, in addition to your income.

After reviewing your total assets, if you fall into the high net worth category a lender is able to use what is called a high net worth waiver.

This allows lenders to be much more creative with repayment strategies which may include using some of these assets in order to approve your mortgage.

Deposit requirements

The amount of deposit you have has a very strong bearing on both your repayments and the chances of your mortgage being approved.

Lenders will be looking at your loan to value (LTV) – the lower the loan to value, the less of a risk you will be perceived, and the higher the deposit, the lower the repayments.

The repayments below show how a higher deposit on a property worth £2 million, can affect your monthly repayments. The figures are based on 3.5% over 25 years.

The above is for indicative purposes only and you should always check with your lender or one of the advisors we work with for the most up-to-date information.

Getting a £1.5 million commercial mortgage

Business mortgages of this amount are available if you meet the right criteria.

Commercial mortgages are used when business loans, usually capped at £25,000, don’t provide the funding needed.

Such circumstances might include purchasing a new property to trade from.

Commercial mortgages can be divided into two types…

• Owner-occupier mortgages: Used to buy a property that will serve as a trading premise for your firm.
• Commercial investment mortgages: Typically used to invest in commercial property that you might be planning to let out.

Whether you are eligible for a £1.5m commercial mortgage is a question that one of the advisors we work with can answer.

They’re experts on high value commercial mortgages, have contacts with specialist lenders and can help you find the best deal.

You can find out more in our complete guide to commercial mortgages.