The notion of a million-pound mortgage will sound different to everyone. For some it’s likely to sound like a target, something to aim for, but for others it will feel intimidating. If we discount the psychology of it and just look at the raw numbers then realistically, it doesn’t change much when it comes to the process of obtaining of a mortgage.
Everything remains the same;
- You still need to pass the credit score
- You still need to show you can afford it
- You still need to have a deposit
The one thing that can prove to be a limiter with a larger mortgage is the level of deposit needed. It stands to reason that if a lender is to release such a large some of money, they want a little more security than they would for a smaller mortgage. There is no strict consensus between lenders, but there is a general trend as to the minimum deposit needed to secure a certain loan size. Rather than look at every lender individually, let’s instead look at the loan you can achieve relative to the deposit that you have;
5% Deposit – Maximum loan tends to be £500k. With some lenders it’s lower still. Two lenders can go higher. Natwest and Santander will offer £570k at this level, but that is the maximum.
10% Deposit – There’s a bit of a split here. There are a few lenders for whom £750k is the maximum loan, notably Halifax, Clydesdale, Scottish Widows and Natwest. Above this, Kensington will support a £1m loan and Kent Reliance would go as high as £3m.
15% Deposit – Again, a split. Accord Mortgages, Halifax, Scottish Widows and a handful of other mainstream lenders will go up to the £1m mark. To exceed a loan of £1m with a 15% deposit remains tough, with only two lenders – the aforementioned Kent Reliance but also Barclays.
20% Deposit – Still not a great spread beyond the £1m mark, with the mainstream lenders numbering only 4 – Halifax, Scottish Widows, Clydesdale and Barclays. Halifax also employ higher ‘large loan’ rates beyond £1m, which are a fair chunk higher than their usual.
25% Deposit – In the search for £1m, this is where the levee breaks so to speak. There are plenty of options beyond £1m here, and where there are more lender options there’s better rates as competition drives a race to the bottom.
To summarise then, the million-pound mortgage is attainable with a deposit of just 10% as a minimum, but the rate at that level is going to be high. In an ideal world you would look for at least 15% deposit, with there only being a great spread of lenders beyond £1m with a 25% deposit.
This is a key factor in obtaining the mortgage, more important than it is with a smaller mortgage, so it’s worth factoring in to your thoughts when it comes to looking at the house of your dreams.
For expert advice on how to get a million-pound mortgage, speak to our specialist mortgage advisers. Freephone 0800 211 8700 or fill in our online enquiry form.
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