How much deposit do I need for a £1 million house?

by Aaron Strutt

Nov 15 2024

The size of the deposit you need to buy a £1 million house depends on the mortgage lender you approach and your income and financial assets. The absolute minimum required is £50,000, although applicants will need £100,000 or £150,000 deposits for most lenders. 

Trinity Financial has access to various mortgage lenders offering 5% deposit mortgages for £1 million properties. Two larger lenders are private banks, and one is through Kent Reliance for Intermediaries. 

Securing a 10% mortgage if you buy a £1 million property is more straightforward. Trinity Financial has access to lenders like Santander for Intermediaries and Clydesdale Bank for Intermediaries, which offer these mortgages.

Aaron Strutt, product director at Trinity Financial, says: “It is possible to secure lower deposit mortgages to buy £1 million properties, but it is subject to mortgage affordability and credit scores.

"The mortgage loan size will be reduced if you have credit cards, loans, cars on finance, or private school fees. However, if you have investments, buy-to-let properties, or other income, it may be possible to use the funds to boost your affordability.

"To access the most competitively priced rates, borrowers typically need a 40% deposit for the lowest rates currently around 4.25%, but with a 5% deposit mortgage through lenders like Investec, the rate will be around 5.65%.”

Assess Your Financial Position

Before applying for a £1 million mortgage, you need to understand your finances:

• Income Requirements: Lenders typically offer 4 to 5.5 times your annual income. For a £1 million mortgage, you’ll likely need an income of £180,000–£250,000 annually (depending on other factors like debts and outgoings). Some building societies offer six times salary mortgages, but you need a larger deposit to qualify. 

• Credit Score: Ensure your credit score is excellent, as large mortgages often require top-tier creditworthiness. Before you apply for a mortgage, it is worth getting a copy of your credit report and ensuring there are no errors or potential issues. 

• Affordability Assessment: Lenders evaluate your monthly expenses, including existing debts, household costs, and dependents. They typically want to see bank statements, payslips, tax returns, and company accounts if you are self-employed. 

Types of Mortgages

For a £1 million mortgage, consider the following options:

• Repayment Mortgage: You repay both interest and capital monthly. This is best if you want to fully own the property at the term's end. Many lenders allow up to 10% of the mortgage to be repaid each year without charge, and some lenders allow 20% overpayments. 

• Interest-Only Mortgage: You pay only the interest each month, with the capital repaid at the end of the term. Suitable if you plan to repay the capital (e.g., investments or asset sales). Some lenders allow borrowers to take a part interest only and part capital repayment to lower the monthly costs while ensuring some of the mortgage is repaid. 

• Fixed-Rate Mortgage: Your interest rate stays the same for a set period (e.g., two, five, or 10 years). This type of mortgage is good for stability. Most borrowers opt for two—or five-year fixes, and the price difference between these rates has reduced in recent months. 

• Variable-Rate Mortgage: Interest rates fluctuate with the market and Bank of England base rate changes. Options include trackers (linked to the Bank of England base rate) or standard variable rates (SVRs). Some lenders offer variable rates without early repayment changes.

Additional Costs Beyond the mortgage itself, consider these costs:

• Stamp Duty: For a £1 million property in England, Stamp Duty is around £41,250 (assuming it’s your primary residence). The amount of Stamp Duty you pay will vary depending on whether you are buying your first home, moving up the property ladder or buying a second property. Click here to use our Stamp Duty calculator. 

• Legal Fees: Solicitors typically charge £1,500–£3,000 for conveyancing. Many of Trinity's clients use SAS Daniels solicitors. 

• Valuation and Survey: Expect to pay £500–£2,000, depending on the survey type. Mortgage lenders often provide a free standard property valuation, which does not include a detailed survey. They often rely on their IT systems to value a property rather than sending a valuer to inspect it. If you want a thorough inspection, you need to appoint a firm. We have Alexander Lyons on our partners' page. 

Call Trinity Financial on 020 7016 0790 to secure a mortgage, book a consultation, or complete our mortgage questionnaire. 

The information contained within was correct at the time of publication but is subject to change.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage