How to get a £1 million pound mortgage
We reveal what you need to know before applying for a £1 million pound mortgage, from total costs to income and other requirements.
Your monthly mortgage repayments depend on the type of mortgage you choose, its duration, and repayment terms.
There are various financial requirements for getting a £1 million pound mortgage, and every lender has their own criteria.
Unbiased can help you to find a qualified mortgage broker best suited to your needs.
How much would a £1 million pound mortgage cost?
A £1 million mortgage in the UK typically costs between £4,167 and £5,393 per month depending on the repayment method, interest rate, and term length.
Beyond the principal loan amount, total costs include interest rates, the repayment method, and economic fluctuations.
You'll need to factor in monthly mortgage repayments, which may be influenced by fixed and variable rates, along with additional fees like arrangement and valuation charges.
You also have to be mindful of potential expenses such as insurance premiums, legal fees, and stamp duty.
This means that there’s no clear answer to the question of how much would a £1 million pound mortgage cost.
However, we explain various options below, and you can use a mortgage calculator to get a basic idea.
What are the monthly mortgage repayments on a £1 million pound loan?
There’s no single answer to the total costs or the size of monthly mortgage repayments on a £1 million loan.
Different types of mortgages are available, and various ways to make repayments, so the size of your repayments depends on your choices.
The economic climate also influences repayments on a £1 million pound mortgage. Mortgage approvals in the UK are at their highest in 15 months according to the Bank of England’s recent figures. This is driven by consumers securing rates before expected volatility due to events in the Middle East and rising inflation.
The actual interest rate paid (known as the effective interest rate) on new mortgages increased by 0.29% to 4.9%, in February 2024, the lowest rate since August 2023.
The loan-to-value (LTV) ratio affects mortgage repayments, too, as it reflects the proportion of the loan to the property's value.
The higher the LTV, the greater the risk to the lender. However, if a buyer has a reasonable deposit, the LTV reduces, lowering the risk.
Due to this decreased risk, lenders often offer more favourable interest rates to buyers with lower LTVs.
Calculating the LTV simply requires subtracting the deposit from the home’s value, with the difference expressed as a percentage.
The main types of mortgages are fixed-rate and variable rate mortgages, with a hybrid option available too.
With a fixed rate £1 million pound mortgage, the interest rate and monthly repayment stay the same for the duration of the agreement.
The different types of variable-rate mortgages have interest rates that fluctuate over the duration of the agreement.
This means your monthly repayments on a £1 million pound mortgage will rise if the interest rate increases or decrease if the rate falls.
The different types of variable-rate mortgages include standard variable rate (SVR), discount, capped, tracker, interest-only, and offset mortgages.
A part-and-part mortgage allows you to split your loan across a repayment and interest-only mortgage.
There are a few different main ways to make monthly mortgage repayments.
These include:
Repayment mortgage: The monthly repayment pays off part of the initial capital you borrowed as well as all the interest owed.
Interest-only mortgage: You pay only the interest owed each month and then pay off the entire mortgage at the end of the agreed-upon term.
Investment-backed: This works the same way as an interest-only mortgage, except you agree to invest the money you save in an equity plan or other policy.
Part and part: This allows you to combine a repayment and interest-only mortgage for a set period during the agreed term.
The interest rate on a £1 million pound mortgage is approximately 5%, although some lenders’ rates might be higher or lower.
For example, if your LTV is 85% and you secure a £1 million mortgage on a standard 5.00% two-year fix, your interest-only monthly repayments would be £4,167. On a full capital repayment structure over 30 years, monthly repayments would increase to £5,368.
If you took the same £1 million mortgage on a 5.04% five-year fix, your interest-only monthly repayments would be £4,200. These would increase to £5,393 on a capital repayment structure over a 30-year term
The table below shows what you might pay each month on a £1 million pound mortgage depending on how much equity you have in your property. The capital repayment assumes a 25-year term.
| Loan-to-Value (LTV) | Estimated Interest Rate | Monthly Interest-Only | Monthly Capital Repayment |
|---|---|---|---|
| 60% LTV | 4.75% | £3,958 | £5,701 |
| 75% LTV | 5.25% | £4,375 | £5,992 |
| 85% LTV | 5.75% | £4,792 | £6,291 |
| 90% LTV | 6.25% | £5,208 | £6,597 |
What are the requirements for getting a £1 million pound mortgage?
The requirements for getting a £1 million pound mortgage vary from lender to lender, as each has its own criteria.
One of the most important factors is your income. If you have an income that supports repayments, you have access to a wider range of lenders.
However, if you have more complex income, such as income from various sources (for example, company earnings or foreign income) or are self-employed, you are likely to access a smaller pool of lenders, and you might need to take a slightly different approach.
Lenders will consider other assets, such as listed security investment portfolios and personal pensions, in addition to existing properties.
Some lenders are happy to structure £1 million pound mortgages (or larger amounts) when a high percentage of the individual’s overall income is comprised of bonuses and dividends.
Private banks can be a good choice if you’re in this situation. Private banks typically deal with high net worth individuals and can consider all your sources of wealth.
Depending on the lender and type of mortgage you choose, you might need a 40% deposit to access the mortgage or the desired interest rate.
Do you need mortgage broker advice to get a £1 million pound house?
While mortgage broker advice isn’t essential for finding and applying for a £1 million pound mortgage, speaking to a broker offers numerous advantages.
A trustworthy broker can help you explore various available deals and even switch to a more competitive one during the mortgage term.
A broker can also help you prepare for your application. They can let you know exactly which documents you need and potentially advise you on how to improve your credit history.
Your broker may also have access to lenders who offer customised agreements to individuals who take out large mortgages.
What income is required for a mortgage of £1 million?
Lenders' income requirements for a £1 million pound mortgage depend on whether they are high-street or private lenders.
In most cases, affordability calculations are based on your salary, with some lenders willing to include a percentage of your annual bonus.
Generally, conventional lenders’ mortgage income requirements are approximately 4.5x your average income.
However, competitive shifts in the mortgage market have made borrowing far more flexible for high earners.
If you have a clean credit profile and a low debt-to-income ratio, a variety of high-street lenders now offer multiples of 5.5x to 6.5x salary.
This means a combined or single household income of £154,000 to £180,000 can successfully borrow £1 million.
Getting mortgage advice for a £1 million property
Applying for a large mortgage isn’t a decision to make lightly. There is much to consider, from monthly repayments to lenders’ requirements around income and other factors.
Let Unbiased match you with a mortgage broker or financial adviser who can offer expert financial advice tailored to your needs.
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