Despite being open to reconnecting, "Harry doesn't want to become a prisoner of the palace," the insider shared of the Spare author.
"He and Meghan want to keep a sense of balance in their lives and their mental health intact," they added about the pair's desire to say close yet separate from the high-profile brood. "He and Meghan are offering to rent an apartment at Kensington Palace and furnish it themselves."
"He hopes that will please William and show that they're serious about coming back," the source noted regarding the two brothers, who have had a rocky relationship since the Sussexes' infamous Megxit.
As OK! previously reported, while the source claimed the controversial couple may be moving back to the U.K., royal expert Tom Bower believes the duo will never be able to return amid all the family drama.
"I don't think he can come back," he stated. "He's caused so much damage to the family and the concern now is that if he does return, he could well damage it even further."
"I think Meghan would've been horrified by Harry's suggestion," Bower added of the former royals who have faced a multitude of career setbacks over the last few months.
"She's not close to William and Kate ... I would imagine the last thing she'd want to do is return to England to live in a small, poky flat in Kensington Palace," he explained about the Suits actress.
Bower explained they may only be considering the move because their backs are against the wall, saying, "Harry and Meghan are experiencing a crisis of identity, a crisis of purpose and a crisis of finance."
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"But Meghan is furious and thinks Kate has no right getting involved in her marriage," they explained. "She would never dream of interfering between her and William."
Star reported on the source's comments over a potential family reunion.