How to Secure a Million Pound Mortgage

A million pound mortgage – it’s got a great ring to it. Be you hero or villain – it’s always beneficial to have an underground command centre to impress guests (or deter infiltrators.) Beside the aesthetic, comfortable living or secret sliding doors – high value property can be an investment. A ‘boost in your rocket boots’ towards grander schemes or a nest egg when you hang up the contracting cape. Securing a large mortgage loan can be a major mission even for those with super earning powers.

A Growing Army

You may think a well-funded and focused finance contractor could procure a large mortgage solo. When trying to raise my skyline HQ off the ground however, securing a sound financial foundation was fraught. Today, contractors are a growing army. Our specialised services are in demand more than ever. Still, it could be that some lenders are hesitant to loan large, despite contractor’s high earning powers.

Sole Trader or Limited Company

Part of the problem is that contractors operate in different ways. Where a sole trader may be Batman’s style, Iron Man’s role as an Avenger is more of a company director. With the latter, lenders will look to a combined salary and dividends in a financial year; possibly problematic for contractors who leave profits within the business. In this case, it would be wise to apply for a plus large mortgage to a lender willing to take into account the company’s retained profits.[1]

Specialist Intelligence

There are lending allies out there who know how to assess large mortgage loan applications. You could save time by bringing in a specialist contractor mortgage broker with experience and existing lenders intel to provide a large mortgage loan super-fast!

Broker Boy!

Because even heroes have heroes. There’s times when you have to secure a sidekick so choose well. I sent out the signal for Broker Boy after hearing reports of his modus operandi from fellow super contractors. When he explained how he successfully liaises with allied lenders on a regular basis to secure large mortgages for contractors I was impressed. When he told me he wouldn’t even charge me for doing so I asked him to repeat that. Sorry I asked – you’re a fee free broker? There might be some other types who make contractor mortgages sound easy, but they neglect to mention they charge YOU for the service. Check out this handy matrix on the best contractor mortgage brokers here.

Property Prices Post Brexit

You may have the means but contractors need to look after their money and invest wisely. Well, now could be the time to move to a large mortgage where they are most prevalent – London. A recently published report by Rightmove has shown house prices in the capital falling faster than anywhere else. While there was an overall drop in the rest of the country by 1.2%, London’s house prices have seen a steeper fall of 2.6% equating to a £16,301 reduction in the prices vendors are seeking[2]

In addition to the usual summer slump you can add post Brexit uncertainty. This is marked by the further average fall to 3.6% (£29,188) in prime central areas where overseas buyers are more prevalent.[3] Investment giant JP Morgan has also forecasted a whopping 10% fall in value by the end of 2017 for London’s property market. Forget the rural hideout – city slickers could save on super dwellings!

To give you a snapshot, average house prices in Camden fell 6% to £1,082,224 in July 2016 from £1,153,801 in June 2016. Check out the average house prices in each London Borough with The Average Property Price in Each London Borough Following Brexit on Landlord News.

Beware Fees!

There’s a number of fees to consider and generally the larger the mortgage, the larger they’ll be. The Stamp Duty Land Tax[4] rate on freehold sales is calculated in price bands with a related (rising) percentage in increments of 2, 5,10 and 12%. On a residential freehold property, a million-pound mortgage will incur tax of £43,750[5] – which could stick in the craw a little once the estate agent takes his cut of the property you’re selling.  Then on top of that some other mortgage broker wants to charge you a fee! Er, no thanks I think I’ll engage a fee free broker instead – hello Broker Boy.

UK interest rates at a record low of 0.25

I previously reported on remortgaging that timing is everything. Well Holy, Even More Lowly Rates Batman! That was when the rate was 0.50% and now it’s hit a super small 0.25%. A current lower rate provides some relief from the kryptonite of Stamp Duty Land Tax. What’s more, if you’ve got a large deposit of at least 35 per cent, you could have a “once-in-a-lifetime opportunity” to get a 10 year fixed-rate mortgage at a very low rate.

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Super Contractors is a trading style of Contract Mortgages Ltd which is an appointed representative of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority. The guidance and/or advice contained in this website is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK.

[1] Intouch Accounting, Can I get a mortgage as a contractor?, Dec 2015

[2] Evening Standard, London house prices down 2.6% as Brexit and summer slowdown hit, Aug 2016

[3] Evening Standard, London house prices down 2.6% as Brexit and summer slowdown hit, Aug 2016

[4] Stamp Duty Land Tax (SDLT) in England, Wales & Northern Ireland.  In Scotland you pay a Land & Buildings Transaction Tax.

[5] HM Revenue & Customs Calculate Stamp Duty Land Tax (SDLT), Aug 2016