Banks are tempting wealthy house buyers with interest rates less than 1%, making it cheaper than ever to obtain a mortgage for more than £1m.
Competition between high street lenders has increased in the market for ‘large loans’ since the cut in base rates by the Bank of England in August. Bigger mortgages typically attract higher rates of interest than standard mortgages, but banks have been offering favourable rates to attract borrowers for larger loans, to help them meet their targets for annual lending.
A large loan definition will vary according to the lender, with some classifying £500,000 as a large loan and others setting the floor at £1m. According to a product manager from Trinity Financial, Aaron Strutt, buyers borrowing up to £5m could attract rates of less than 1% for a two-year fixed rate deal.
Yorkshire Building Society recently announced a discounted variable mortgage for two years, offering 0.98% on loans up to £5m. The building society will lend up to 65% of the property’s value and charge a fee of £1,495. HSBC, Barclays and Santander are also reducing interest rates on loans for more than £1m.
Some lenders are offering incentives, like free valuations, to encourage wealthy buyers. According to brokers, the majority of wealthy buyers preferred the rates on short term fixed rate deals than the longer-term deals which offered certainty.
Mortgage advisers study on a CeMAP training course, so that they have experience in all types of mortgage and lending to different buyers.
