£1m plus mortgage?

According to the FT, multi-million pound mortgages from high street lenders are heading for extinction, mortgage brokers said yesterday, as banks impose tough new limits on how much they will lend, or charge steep arrangement fees of up to £40,000.

Abbey, Nationwide, Chelsea and Intelligent Finance have all slashed the maximum amount they will lend in recent months, while mortgages for £2m and more at the Halifax, Bank of Scotland, and Birmingham Midshires brands carry fees running to tens of thousands of pounds.“Million-pound-plus mortgage deals are becoming virtually extinct as lenders turn their backs on the upper end of the market,” said Gary Festa, director of wealth manager and mortgage planner HFM Columbus. “Assuming you can find a lender prepared to arrange a loan in excess of £1m – and we are talking about barely a handful – the fees become crippling, even for those with up to 50 per cent loan-to-equity.” He cited a £2m mortgage offer from Halifax needing a £40,000 arrangement fee upfront.

Abbey, for example, was previously willing to lend up to £7.5m on one of its mortgages but has since capped loans at £550,000 and Intelligent Finance has reduced its cap to £750,000. Nationwide and Chelsea now have a cut-off point of £500,000, according to HFM Columbus.

First Direct imposes a limit of £400,000 on fixed-rate loans and a £1,498 fee. Borrowers wanting more money have to pay an additional fee. So although it is theoretically possible to apply for additional tranches, doing so will incur a further fee.