Million pound mortgages disappear

Friday, 30 May 2008 12:00

Securing a mortgage is becoming nigh on impossible as the credit crunch hits higher end property market.

While acknowledging a number of lenders currently offer loans of up to £1 million, the wealth management firm HFM Columbus argues going even one pound over this figure takes the vast majority of banks and building societies out of the market.

"Assuming you can find a lender prepared to arrange a loan in excess of £1 million - and we are talking about barely a handful - the fees become crippling, even for those with up to 50 per cent loan to equity," said HFM Columbus director Gary Festa.

"Barclays - traditionally a major player in this high net worth mortgage arena - imposes a huge £5,000 arrangement fee for a £1 million plus mortgage - and adds an extra £5,000 to every extra million borrowed.

"In addition, it increases its rates over the first million and again for every additional one," he added.

According to the research just four lenders offer deals over £5 million.

"It comes down to one simple factor - the money is no longer available in the current climate. Although some private banks will lend via brokers to appropriate individuals," said Mr Festa.

"The pattern we are seeing now is that lenders are increasingly capping their loan offerings."

For example, high street lender Nationwide caps lending at £500,000, along with the Chelsea building society.

Given the refusal of high street lenders to provide such sums, others are willing to step into the field.

"Private lenders rarely looked attractive in the past, but now many of them are looking very attractive against the limited retail offering," said Mr Festa.

"Private banks are increasingly looking at doing deals, and are considering offset mortgage arrangements for higher net worth clients with potentially big deposits - and there are plenty of them still in the City," he concluded.

• Tags:
• mortgage advice uk
,
• news