How did Meghan Markle and Prince Harry afford their “starter home”?
If you just received the news that Prince Harry & Meghan Markle bought a million-dollar home in California, you might be scratching your head about how they can afford the place. After all, they gave up public funds when they left the Royal Family in December. After “Megexit,” how can they afford their new house, or anything?
You’ve got questions, we’ve got answers. Here’s the scoop on how Prince Harry and Meghan Markle are funding their new life and their first-ever home together.
Prince Harry and Meghan Markle gave up their royal family allowance at the beginning of 2020. After the split with the House of Windsor, the couple stated they wanted to be “financially independent”. However, their new house has a hefty price tag that the royal couple needed to prove they could match.
Conventional finance wisdom tells us that to buy a house, you go to the bank and get a mortgage, whether you’re royal or not. To prove to the bank they could afford their new lavish house, they needed to convince the mortgage lender that they wouldn’t default on their new, pricey house without a steady income, a hard feat for anyone.
A big sum upfront
To convince the lender that their finances were in order, the names Prince Harry & Meghan Markle wouldn’t be enough. They paid their lender, City National Bank, a £3.8million deposit on the home, nearly a third. Typically, a downpayment on a house should be twenty percent according to Bankrate.
The rest of their house will be paid back in a mortgage, setting Prince Harry & Meghan Markle back £34,750 per month for thirty years. Per conventional budgeting wisdom, your rent or mortgage should be no more than a third of your take-home pay (your mileage may vary if you live in an expensive area like a city), and ideally, just thirty percent of your monthly expenses.
To keep the new house, Prince Harry & Meghan Markle will need to bring in nearly £105,000 per month after taxes. Factoring in utilities & maintenance, probably more. The taxes certainly aren’t cheap, with property taxes on their new place setting them back £52,000 per year alone.
Bills, bills, bills
While rent is always the first bill you should pay, royal or not, the house bills don’t end there. Prince Harry & Meghan Markle still have to pay utilities to keep the lights on & the AC running. With a house their size, these can run into six figures.
Since conventional finance wisdom places your utility bill as part of housing expenses, Prince Harry & Meghan Markle will have to factor their utility expenses into their housing budget. Their housing budget also includes maintenance and in their case, £5million-a-year security arrangements as part of the cost of fame.
Prince Harry & Meghan Markle are also on the hook to UK taxpayers for their old place. The couple agreed to pay back £18,000 per month to reimburse taxpayers for the £2.4 million in renovations on Frogmore Cottage. They will continue to use the cottage when they’re in the UK.
Can they afford it?
Royal finance expert David McClure said: “I am surprised they can afford it all. They must start making money quickly.” Looking at their finances now, he may be right. At least on Prince Harry’s end. Prince Harry inherited £6.5million from his mother, Lady Diana Spencer’s will, and another £4million from the Queen Mother, Prince Harry’s great-grandmother.
Right now, Prince Charles, Prince Harry’s father, is footing Prince Harry & Meghan Markle’s lifestyle stateside. The heir to the British Throne is continuing to support his son to the tune of £2 million from his personal fortune of £100 million according to The Sun.
Being a parent supporting his son aside, Prince Charles is very close with Prince Harry & Meghan Markle, despite their split from the royals. An explosive biography being released this week, Finding Freedom, claims that Meghan adopted Prince Charles as a “second father,” evidenced by him walking her down the aisle on her wedding day.
What about Meghan Markle?
Is the Suits actress destitute after her time with the Royals? Meghan Markle’s net worth is estimated to be about $5 million according to Business Insider, which is less than their projected total of Prince Harry’s. However, it’s reported that Markle is looking for acting gigs, so she may be able to keep their lifestyle afloat soon.