It is usually a choice between private banking and a more traditional banking provider, and these both offer varying positive and negative aspects.
For those lucky enough to afford such a thing, million pound mortgages are an option when it comes to buying a home. Not all lenders offer them, but there are a few different providers, so you will need to know what to look for.
Private lenders
Although the term private banking may suggest an element of exclusivity and elitism, this is an option for more people than you may first assume. In order to secure yourself a loan from a private lender, you will need to have a genuine desire and capability to start a banking relationship that goes above and beyond that which may be expected with a more conventional lender.
This does not mean that these lenders will not give you funding unless you invest in them, as quite a number of them will be willing to do so. The relationship is important because private lenders tend to issue loans based on the client’s asset base and wider profile, as opposed to just on their income.
As a result of this method of measuring a client’s wealth and ability to maintain repayments, it is a general rule that the more invested by a client, the worthier they are of being lent money. Private banking firms take up a large proportion of the million pound mortgage market, largely due to them offering a greater level of flexibility in their willingness to look beyond income.
Interest-only loans are available from the vast majority of lenders, as is the possibility of the bank being willing to consider 100 per cent of your income from bonuses as part of their affordability checks. This is one of the main areas in which private banking holds a real advantage over the more traditional banking options, because the majority of which will only accept up to 50 per cent.
Conventional lenders
The structure of million pound mortgages is much more straightforward than that offered by private lenders. The acceptance of an application will depend on your income levels and your ability to maintain the repayments necessary. This straightforward nature has both its advantages and disadvantages, as the process is easier to understand but may also lead to a failed application due to the structuring of your income.
If a fair portion of your income comes in the form of bonuses then this may represent a problem for you, as the majority of mainstream lenders will only accept only 50 per cent of your income from bonuses as part of your affordability checks.
Most mainstream lenders require the mortgage to be taken out on a full capital and interest repayment basis. However, with a 25 per cent deposit it can be possible to secure yourself 50 per cent of the loan on an interest-only basis.
