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Which high street banks offer multi-million-pound mortgages?
Be it for a country mansion or a London townhouse, thousands of buyers are taking out mortgages of more than £1m every year.
But where can you get a seven-figure mortgage, and how much deposit will you need? Which? investigates.
How many million-pound mortgages are granted?
Last year, lenders gave out a total of 3,791 mortgages of £1m or above, according to data provided to Which? by UK Finance.
While this figure might sound insignificant (it's just 0.3% of the overall market), it marks a 9% increase on 2017's figure of 3,477.
Which lenders offer mortgages of £1m and above?
High-net-worth borrowers sometimes look to private banks or use company structures to finance property purchases. But it's actually possible to get a mortgage of £1m or more from the majority of high street lenders.
Of the 3,709 residential purchase mortgages currently advertised by banks and building societies, 855 have a maximum loan size of at least £1m - that's about 23% of all available deals. And, as with lower-value loans, the vast majority of these products are available on a fixed-rate basis.
The interactive table below shows the maximum loan sizes offered by every UK lender that provides mortgages of at least £1m.
As you can see, Barclays, Metro, NatWest and Ulster offer the biggest mortgages - up to £10m in each case.
- Find out more:mortgage lender reviews - which are the best and worst providers?
Can you get a million-pound mortgage with a small deposit?
The majority of these products are only available to buyers with hefty deposits, though a handful of deals are theoretically available with a deposit of just 10%.
Nine lenders - Chorley, Clydesdale, Dudley, Kensington, Kent Reliance, Leek, Newcastle and Saffron - offer some fixed-rate and variable £1m+ products at 90% loan-to-value (LTV).
For a better range of options, though, you'll need a deposit of at least 15% of the purchase price. At 85% LTV, high street names such as Barclays, Halifax and Santander enter the fray and introductory rates drop considerably - as shown in the table below.
| Maximum LTV | Number of lenders | Number of deals | Cheapest introductory rate on £1m mortgage (two-year fix) |
| 90% | 9 | 25 | 2.29% (Clydesdale) |
| 85% | 16 | 129 | 1.57% (Halifax) |
| 80% | 24 | 169 | 1.52% (Halifax) |
| 75% | 29 | 248 | 1.44% (Halifax) |
| 60% | 21 | 190 | 1.35% (Halifax) |
Source: Moneyfacts. 29 April. Excludes remortgaging-only deals.
How do banks judge how much deposit you'll need?
With higher-value loans, it's common for banks to adopt different lending criteria due to the amount of risk they'll be taking on.
Some lenders use a sliding scale, with the maximum loan-to-value you can borrow dropping as the size of the loan gets bigger.
For example, Leeds Building Society imposes the following criteria:
| Mortgage size | Maximum LTV |
| £400,000-£500,000 | 85% |
| £500,000-£750,000 | 80% |
| £750,000-£1m | 75% |
| £1m to £1.25m | 65% |
How do income multiples work?
If you're looking to take out a large mortgage on the high street, you might need higher earnings as well as a bigger deposit.
That's because on loans of more than £500,000, some lenders set an income multiple cap of four times your annual salary - less than the four-and-a-half or five times you might be able to obtain on mortgages of a lower value.
If you're buying a property for £1m, the numbers might work out like this:
- Property cost: £1m
- Deposit: £150,000 (15%)
- Mortgage: £850,000 (85%)
- Annual income needed to obtain mortgage: £212,500.
Repayment vs interest-only mortgages
Interest-only mortgages aren't very common in the residential market these days, but some lenders are willing to be flexible on repayment when it comes to higher-value loans.
For example, Skipton Building Society says that on a loan of more than half a million pounds, the first £500,000 can be offered on an interest-only basis (subject to the borrower having a repayment strategy in place), but any further borrowing after this has to be solely on a repayment basis.
This example should only be used for guidance, as repayment rules will vary between banks and will be influenced by your specific financial circumstances.
Alternative ways of obtaining a £1m mortgage
Some high-net-worth individuals look to specialist lenders and brokers to fund their property portfolios, rather than seeking finance from high street lenders.
Some specialist brokers will hook up borrowers with finance from private investors, boutique lenders and private banks who specialist in larger loans and could potentially offer more flexible underwriting criteria than high street lenders.
One example of this is Investec Private Bank. Investec offers a bespoke mortgage service for individuals earning a minimum of £300,000 a year and with a net worth of at least £3m. Investec's service involves a 'dedicated private banker' to guide you through the process.
As well as your earnings, it can be possible in some cases to use your portfolio of assets - such as stocks, shares and pension funds - as leverage to obtain a larger loan.
Borrowers considering these options should take independent financial advice before rushing in.
