Large Interest-Only Mortgages for High Net Worth Borrowers

Interest-only can be an attractive way of structuring a large mortgage for some high earners and high net worth borrowers, particularly where they have substantial investments, property equity or other assets that could provide a credible way of repaying the mortgage capital.

Instead of repaying some of the capital every month, your contractual monthly payments generally cover the interest charged on the loan. This can reduce the required monthly payment compared with an equivalent repayment mortgage, but the original capital remains outstanding and must ultimately be repaid.

For a £1 million, £2 million or larger interest-only mortgage, the choice of lender and repayment strategy can make a significant difference.

This guide explains how large interest-only mortgages work, the repayment strategies lenders may consider and how high net worth borrowers can potentially structure interest-only borrowing.

Quick Answer: Can I Get a Large Interest-Only Mortgage?

Potentially.

Large interest-only mortgages are available in the UK, subject to affordability, lender criteria and an acceptable repayment strategy.

They can be particularly relevant for borrowers who have:

• High or complex income
• Significant investment portfolios
• Substantial property equity
• Other property assets
• Large bonuses or variable remuneration
• Significant cash reserves
• A requirement to borrow £1 million or more
• A credible plan for repaying the capital

However, having a high income or substantial wealth does not automatically qualify you for an interest-only mortgage.

The lender still needs to establish that the mortgage is affordable and that there is a credible strategy for repaying the outstanding capital.

Looking for a large interest-only mortgage? Speak to an Oportfolio mortgage adviser about your borrowing requirements and repayment strategy.

How Does a Large Interest-Only Mortgage Work?

With a repayment mortgage, your monthly payments include both interest and a portion of the mortgage capital.

With an interest-only mortgage, your contractual monthly payments generally cover the interest charged on the loan.

The difference becomes particularly noticeable with larger mortgages.

Imagine a borrower takes a:

£1,000,000 interest-only mortgage

If no capital repayments or overpayments are made during the mortgage term, approximately £1,000,000 would still need to be repaid at the end.

For that reason, lenders don’t assess a large interest-only mortgage solely on whether you can afford the monthly interest.

They also need to understand how the capital will eventually be repaid.

Why Might a High Net Worth Borrower Choose Interest-Only?

Lower required monthly payments are one potential benefit, but they aren’t the only reason a high net worth borrower might consider interest-only.

For some borrowers, the decision is about liquidity and how their wider assets are structured.

For example, someone purchasing a £2 million property may have a substantial investment portfolio.

Rather than selling investments to increase their property deposit and taking a smaller mortgage, they may prefer to retain more of their capital outside the property.

Another borrower might receive substantial annual bonuses and prefer greater monthly cash-flow flexibility while making discretionary capital repayments separately.

Interest-only can therefore potentially form part of a wider borrowing strategy.

However, retaining money in investments rather than using it to reduce mortgage borrowing introduces additional financial and investment risk. Investment returns are not guaranteed, while mortgage interest continues to be charged on the outstanding balance.

How Much Can I Borrow on an Interest-Only Mortgage?

There isn’t one universal maximum.

How much you could borrow will depend on factors including:

• Your income
• How your income is structured
• Mortgage affordability
• Deposit and loan-to-value
• Property value
• Your assets
• Proposed repayment strategy
• Mortgage term
• Credit profile
• The lender’s individual criteria

Large interest-only mortgages can range from hundreds of thousands of pounds to several million pounds.

At higher loan sizes, lender selection can become particularly important because different lenders may have different appetites for large loans, complex income and particular repayment strategies.

Someone seeking a £1.5 million mortgage with substantial investment assets, for example, may have very different options from someone seeking the same mortgage amount based predominantly on PAYE income and future property sale.

Can I Get a £1 Million Interest-Only Mortgage?

Potentially.

A £1 million interest-only mortgage will normally require the borrower to demonstrate both:

1. Sufficient income to meet the lender’s affordability requirements; and
2. An acceptable strategy for repaying the £1 million capital balance.

The appropriate lender will depend on your complete financial position.

For some borrowers, a mainstream lender may be suitable. Others may need a lender offering more flexibility around large loans, complex income or substantial assets.

The fact that a mortgage exceeds £1 million does not automatically mean it has to be arranged through a private bank.

Can I Get a £2 Million or Larger Interest-Only Mortgage?

Potentially, although the pool of appropriate lenders may become more specialised as mortgage requirements increase.

Borrowers seeking £2 million or more can have circumstances involving:

• Multiple income streams
• Company ownership
• Partnership income
• Large annual bonuses
• Investment income
• International income or assets
• Significant investment portfolios
• Multiple properties
• Complex ownership structures

In these circumstances, the mortgage may need to be assessed more holistically than a straightforward salary-multiple calculation.

Private banks and specialist large-loan lenders can become relevant, although mainstream lenders should not automatically be discounted.

What Repayment Strategies Can Be Used for a Large Interest-Only Mortgage?

Interest-only lenders require a credible strategy for repaying the capital.

Acceptable repayment strategies vary between lenders, but depending on the circumstances they could potentially include:

• Investment portfolios
• Stocks and Shares ISAs
• Pensions
• Cash savings
• Other properties
• Sale of another property
• Sale of the mortgaged property where acceptable
• Other identifiable assets

The presence of an asset doesn’t automatically mean a lender will accept its full value.

A lender considering an investment portfolio, for example, may look at the type of investments, liquidity, current value, volatility and the amount available relative to the outstanding mortgage.

The repayment strategy therefore needs to work within the specific lender’s criteria, rather than simply existing on paper.

Can I Use an Investment Portfolio to Repay an Interest-Only Mortgage?

Potentially, and this can be particularly relevant for high net worth borrowers.

Consider someone with:

Mortgage required: £1,000,000
Investment portfolio: £1,750,000

The borrower may prefer not to liquidate a significant portion of the portfolio simply to reduce their mortgage requirement.

Instead, they could investigate whether an appropriate lender would accept some or all of those investments as part of the mortgage repayment strategy.

Different lenders may consider factors including:

• Investment type
• Current valuation
• Liquidity
• Investment volatility
• Ownership of the assets
• Minimum portfolio values
• The relationship between asset value and mortgage balance

The full £1.75 million should not automatically be assumed to be available for mortgage purposes.

Can I Use the Sale of My Property as the Repayment Strategy?

Potentially.

Some lenders may accept the future sale of the mortgaged property as a repayment strategy where their criteria allow it.

However, the lender needs to be satisfied that the strategy is credible.

Depending on the lender, factors could include:

• Property value
• Mortgage amount
• Loan-to-value
• Equity remaining
• Borrower’s age
• Whether sufficient equity is likely to remain to provide an appropriate future housing solution

You should not simply assume that future property-price growth will repay the mortgage.

The lender will assess the strategy according to its own requirements.

Can I Use Another Property as My Repayment Strategy?

Potentially.

A high net worth borrower may own another residential property, investment property or portfolio that could potentially form part of a repayment strategy.

Again, lender criteria differ.

The lender may consider the property’s current value, outstanding borrowing, ownership, equity and whether selling it could realistically provide sufficient funds to repay the interest-only balance.

This can be particularly relevant for borrowers who own multiple properties but don’t want to sell them at the point the new mortgage is arranged.

Can Pension Assets Be Used for Interest-Only?

Potentially, depending on the lender, the pension and the borrower’s circumstances.

Lenders can take different approaches to pension-based repayment strategies, including what portion of a pension they are prepared to consider and the borrower’s age at the end of the mortgage term.

A substantial pension balance should therefore not automatically be treated as an acceptable repayment strategy without checking the lender’s criteria.

What Is a Part-and-Part Mortgage?

A large mortgage doesn’t necessarily have to be entirely repayment or entirely interest-only.

Some borrowers use a part-and-part mortgage, where one portion is arranged on a repayment basis and another on interest-only.

For example:

Total mortgage: £1,500,000

This could hypothetically be structured as:

Repayment: £900,000
Interest-only: £600,000

The £900,000 portion would gradually reduce through the contractual monthly payments.

The borrower would maintain a separate repayment strategy for the £600,000 interest-only element.

For some borrowers, this can provide a middle ground between reducing mortgage capital and retaining greater monthly cash-flow flexibility.

Availability and the proportions permitted depend on lender criteria and affordability.

Do I Need a Private Bank for a Large Interest-Only Mortgage?

Not necessarily.

Private banks can be useful for some high net worth borrowers, but a £1 million or multi-million-pound mortgage doesn’t automatically require private banking.

Mainstream lenders can also offer large interest-only mortgages where borrowers meet their criteria.

A private bank may become particularly relevant where circumstances involve:

• Very large borrowing requirements
• Significant investment assets
• Complex or irregular income
• International income or wealth
• Business ownership
• Wider private banking requirements
• A need for more bespoke underwriting

The right approach is usually to compare the options rather than assume that either a high-street lender or private bank will automatically provide the better solution.

Can Bonus or Commission Income Be Used?

Potentially.

Large mortgage borrowers frequently receive a significant proportion of their remuneration through annual bonuses, commission, carried interest or other variable income.

Lenders can treat this income differently.

They may consider:

• Previous bonus or commission payments
• Frequency
• Track record
• Current remuneration
• Employer evidence
• How variable the income has been

This can materially affect affordability on a large interest-only mortgage.

For example, someone earning a £150,000 basic salary plus a substantial recurring bonus may be assessed differently between lenders depending on how much of that additional remuneration is accepted.

Can Company Directors Get Large Interest-Only Mortgages?

Yes, potentially.

Company directors can have income that doesn’t fit neatly into a standard PAYE affordability calculation.

Depending on the lender and circumstances, an assessment could potentially consider:

• Salary
• Dividends
• Salary and share of company profits
• Retained profits
• Wider business performance

This can be particularly important where the director deliberately leaves substantial profit within the company rather than extracting it personally.

The most appropriate lender can therefore depend on how the business and personal income are structured.

Can International Income or Assets Be Considered?

Potentially, although this can make lender selection more specialised.

High net worth borrowers may earn income overseas, hold investments in other jurisdictions or have wealth denominated in different currencies.

Relevant considerations can include:

• Currency
• Country of origin
• Source of wealth
• Source of funds
• Tax position
• Documentation available
• Where assets are held

Not every lender will be suitable for international or multi-jurisdictional circumstances.

Is Interest-Only Cheaper Than a Repayment Mortgage?

Not necessarily.

Interest-only normally means a lower required monthly mortgage payment because you’re not contractually repaying the capital each month.

But that doesn’t mean the mortgage is cheaper overall.

With a repayment mortgage, the outstanding balance gradually falls.

With interest-only, the capital generally remains outstanding unless you make separate repayments.

Interest is therefore charged against a larger balance for longer.

Interest-only should consequently be viewed as a mortgage structure, rather than simply a way of making a large mortgage cheaper.

What Are the Risks of a Large Interest-Only Mortgage?

The main risk is straightforward: the mortgage capital still needs to be repaid.

If your repayment strategy does not perform as expected, you could reach the end of the mortgage term with a substantial outstanding balance.

Other considerations can include:

• Investment values falling
• Property values changing
• Repayment assets becoming less liquid
• Changes to your income
• Changes to your circumstances
• Refinancing not being available when expected
• Interest-rate changes affecting monthly costs

The larger the interest-only balance, the more significant these risks can become.

Oportfolio Insight: Assets Matter, But So Does Liquidity

A common misconception with high net worth interest-only mortgages is that net worth alone determines what you can borrow.

Consider two borrowers who each have £2 million of assets.

One holds £2 million predominantly in liquid investments.

The other has the same headline net worth, but most of it is tied up in a private company and illiquid assets.

On paper, both borrowers may appear equally wealthy.

From a mortgage lender’s perspective, however, the strength of their potential repayment strategies could be very different.

When assessing a large interest-only mortgage, we therefore look at three important questions:

1. What assets do you have?
2. How accessible are those assets?
3. How will the mortgage capital actually be repaid?

For interest-only borrowing, affordability helps establish whether you can service the mortgage. The repayment strategy establishes how the capital will ultimately be cleared.

Large Interest-Only Mortgage Example

Consider a high-earning borrower purchasing a £2 million property.

They have:

Property value: £2,000,000
Deposit: £750,000
Mortgage required: £1,250,000
Investment portfolio: £1,800,000

Rather than liquidating a large proportion of their investments to reduce the mortgage, the borrower wants to investigate an interest-only structure.

An adviser would need to consider:

• Whether income supports the £1.25 million mortgage
• The resulting loan-to-value
• Whether the investment portfolio could provide an acceptable repayment strategy
• Which lenders accept that type of investment
• Whether full interest-only or part-and-part borrowing is more appropriate
• Whether a mainstream lender, specialist lender or private bank is most suitable

This is an illustration rather than a mortgage recommendation or indication that a particular lender would approve the arrangement.

It demonstrates why large interest-only cases are often about structuring the mortgage around the borrower’s complete financial position, rather than simply finding a lender offering interest-only.

Large Interest-Only Mortgages in London

Interest-only can be particularly relevant to high-value property purchases in London, where even borrowers with substantial incomes can require seven-figure mortgages.

For someone buying in areas such as Putney, Fulham, Richmond, Wimbledon, Chelsea or other higher-value parts of London, a large deposit does not necessarily eliminate the need for significant mortgage borrowing.

Borrowers may also have substantial wealth held outside the property through investments, businesses or other assets.

In these circumstances, comparing repayment, interest-only and part-and-part structures can help establish how the mortgage could be structured around both the property purchase and the borrower’s wider finances.

How Oportfolio Helps With Large Interest-Only Mortgages

Large interest-only mortgages can require more than a standard affordability calculation.

At Oportfolio Mortgages, we work with high earners and high net worth clients who may have complex income, substantial assets and larger mortgage requirements.

We can assess:

• Your mortgage requirement
• Income and affordability
• Deposit and LTV
• Existing property
• Investment and other assets
• Proposed repayment strategy
• Whether interest-only or part-and-part borrowing could be appropriate
• Mainstream, specialist and private-bank mortgage options

Our aim is to identify lenders whose criteria fit the way your income and wealth are actually structured rather than trying to force complex circumstances through an unsuitable standard lending model.

Speak to a Large Mortgage Adviser

If you’re considering a £1 million, £2 million or larger interest-only mortgage, Oportfolio can help you understand the options available based on your income, assets, property and proposed repayment strategy.

Whether you’re buying a high-value property, moving home or restructuring an existing large mortgage, we can assess the case across appropriate mainstream, specialist and private-bank options.

Speak to an Oportfolio mortgage adviser about a large interest-only mortgage.

You can also explore our High Net Worth Mortgages, Mortgages Over £1 Million and Private Bank Mortgages guides.