Million pound mortgages explained: who borrows, and what lenders want to see

Million pound mortgages were once considered the preserve of wealthy footballers and bankers, but increasingly they are being taken out by doctors and two-income couples, experts told Newspage. 

While higher interest rates have made borrowers more price-conscious, demand for seven-figure loans remains strong, with high earners looking to borrow larger sums to secure family homes.

So who is borrowing at this level, do you really need a private bank, and what do lenders look for before approving such a sizeable loan?

Who takes out a £1m mortgage?

The stereotype of a £1m mortgage is often associated with footballers or bankers but, according to brokers, it is increasingly common for doctors, partners and two-income couples.

Bob Singh, Founder at Uxbridge-based Chess Mortgages, said: “Seven-figure mortgages are no longer the preserve of the super wealthy. A couple earning £75,000 each could obtain a £1m mortgage with just a 10% deposit.

"That is enough to buy a mini mansion or a one bed apartment in a salubrious London postcode.

"Large mortgages, once the lifeblood of private banks, are now available from virtually every lender as they are all keen to break into this sector. 

"Progress is being made by the introduction of cleverly designed mortgages for those that meet the FCA’s High Net Worth definition of earning £300k net pa or with assets of £3m+.

"Flexible underwriting and taking time to understand the borrower has led to lenders being able to take a holistic view of a borrower’s asset base and sources (or potential sources) of income.

"This includes income outside normal salary and/or dividends, including from overseas in other currencies.

"Interest-only and rolled up interest suit many higher rate tax payers who do not need  to extract more income than necessary and pay tax.”

Ria Ali, Director at PMS Mortgages, said: "At £1m+, we mostly see senior professionals: consultants, private practice doctors and dentists, law and accountancy partners, and business owners.

"In Surrey and the London commuter belt, a family home easily pushes borrowing past £1m. Income structure makes or breaks these cases. Bonus is often only partly counted, self-employed clients need clean accounts, and overseas income may be discounted. 

"The high street does more large loans than people expect; private banks suit complex income or asset-rich clients.

"Higher rates haven't killed demand but have changed deals. Many borrowers go interest-only, planning to downsize at maturity and repay from the sale. Lenders accept this where equity is strong.

"The biggest mistake is going straight to your own bank. The best preparation: get your income evidence in order and speak to a whole-of-market broker before you offer."

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, commented: "A £1m mortgage sounds like something reserved for footballers or people who use ‘summer’ as a verb, but increasingly we’re seeing business owners, senior professionals and couples with two strong incomes.

"High-street lenders are still very competitive for clean cases, while private banks become useful when the finances involve bonuses, dividends, companies or overseas income. 

"Higher rates have made borrowers noticeably more price-conscious because 0.25% suddenly matters when you stick six zeros after the pound sign.

"The golden rule is preparation and at £1m-plus, being wealthy helps, but it still doesn’t exempt you from producing three months’ bank statements.”

Do you need a private bank to borrow £1m?

There is a common misconception that for a seven-figure loans borrowers need a private bank but that’s not strictly true, according to brokers.

Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, said: “A £1 million mortgage sounds highly specialist, but the loan size alone does not automatically mean a borrower needs a private bank.

"Plenty of mainstream lenders will consider seven-figure loans where the income, deposit and property fit their normal criteria. 

'The cases that become more specialist are usually the ones where the wealth does not sit neatly in a salary. Large bonuses, dividends, retained company profits, overseas income or significant assets can all produce very different outcomes from lender to lender.

"At this level, the biggest mistake is assuming your own bank will necessarily understand the case best. The right answer might still be a high street lender, but equally it could be a specialist or private bank if greater flexibility is needed.”

Have higher rates hit demand for £1m mortgages?

Although higher rates for £1m mortgages have taken some heat out of the market, the demand for seven figure borrowing remains.

Doug Miller, Mortgage Broker and Director at Bath-based Lansdown Financial Services, said: “A million-pound mortgage might sound eye-watering to some, but in parts of London and the South East, it's increasingly the reality for high earning professionals and families looking to move up the property ladder.

"Higher mortgage rates have taken some heat out of the market, but demand for seven-figure borrowing remains. Even wealthy borrowers are watching the pennies when small rate changes can add thousands to annual repayments. 

'You don't need to be a millionaire or have a private banker on speed dial. High street lenders can be extremely competitive, although complex income can make things trickier.

"Deposits of 15% or more are typical, but we've successfully arranged million-pound mortgages with just 5% to 10% down. The biggest misconception is that a high income guarantees a huge mortgage. It doesn't.

"At this level, choosing the right lender can make or break a property purchase, ensuring the correct lender is used to assess your income in the required way.”

James Blackler, Managing Director at London-based Oakstead Finance, said: “Higher mortgage rates have not dented demand at the million pound level. The buyers we see are taking a long-term view of a home they intend to live in for years, with strong incomes and deposits behind them, so a move in the rate does not change the decision.

"The bigger risk at this level is not the rate, it is the quality of the advice. A whole-of-market independent broker is essential here, because loan sizes are large, lender criteria differ sharply on income, and one wrong placement can cost far more than any rate movement. 

"Preparation matters, but access to the whole market matters more.”

What do lenders want to see for million pound mortgages?

A bigger loan means more checks, not fewer, whatever the borrower earns, according to experts.

Andrew Montlake, CEO at London-based Coreco, said: “A £1 million mortgage is not solely the preserve of the super-rich. Borrowers include senior professionals, business owners and dual-income households buying family homes, alongside wealthy international clients.

"We routinely deal with high-net-worth borrowers, and lenders taking a blank-sheet-of-paper approach rather than relying on rigid criteria can work particularly well.

'That flexibility matters with multiple income sources, overseas or investment income, retained profits, or unusual properties such as homes with large acreage.

"High-street lenders can be very competitive for straightforward cases. Private banks and specialist large-loan teams come into their own when the borrower’s income, assets or property need individual underwriting.

"Higher rates have made borrowers more price-sensitive, but the biggest mistake is assuming a large income means less scrutiny. Having every strand of income and wealth clearly evidenced from the outset can make all the difference.”

Why borrow more than you need?

Some buyers with big deposits choose to borrow more so cash can be held back for investments, school fees and other costs.

Ross Lacey, Director at Rayleigh-based Fairview Financial Management, commented: “We're seeing more people take out larger mortgages, even where they have chunkier deposits they could put down.

"The difference in rate between a 40% deposit and 25% can sometimes be minimal. A larger mortgage means keeping back more cash for things like investments, school fees and other lifestyle objectives.

"It's a similar rationale to an interest-only mortgage, where as much capital as possible is kept back, and tends to be the favoured approach by high net worth individuals.

"Lenders will often want higher deposits for million pound mortgages, but they can still be secured with some, at only a 10% deposit.

"Many borrowing at this level with have more complex income including bonuses, commission, RSUs and other remuneration.

“Each lender will have their own stance on this, so working with a broker that understands this can save a lot of time and stress.”