In this blog, we look at different aspects of mortgages, taking one of £150k as an example. Remember that this isn’t the price of the house, it’s the amount borrowed for a property, the remainder would be paid as a deposit.
Monthly repayments on a £150k mortgage
You probably know that mortgages are paid back on a monthly basis, and this includes the interest. However, the amount paid back each month varies for each mortgage dependent on multiple factors. For example, the interest rate you’re offered is affected by your credit history. The length of the mortgage will determine the amount required each month as well.
Here are some examples monthly repayments with different mortgage lengths and interest rates:
| 1% | 2% | 3% | 4% | 5% | |
| 5 years | £2,564 | £2,629 | £2,695 | £2,762 | £2,831 |
| 10 years | £1,314 | £1,380 | £1,448 | £1,519 | £1,591 |
| 15 years | £898 | £965 | £1,036 | £1,100 | £1,186 |
| 20 years | £690 | £759 | £832 | £909 | £990 |
| 25 years | £565 | £636 | £711 | £792 | £877 |
| 30 years | £482 | £554 | £632 | £716 | £805 |
| 35 years | £423 | £497 | £577 | £664 | £757 |
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How much interest is paid?
The amount of interest paid of course depends on mortgage rates, and the length of the mortgage. If we take an average interest rate of 3%, the following is what you could look at paying in total and how much is interest:
- £150k mortgage over 5 years – monthly repayment of £2,695, where total interest paid is £11,712 and so complete amount paid is £161,712
- £150k mortgage over 25 years – monthly repayment of £711, where total interest paid is £63,358 and so complete amount paid is £227,621
What deposit do I need?
The deposit amount required for a £150k mortgage depends on the value of the property being purchased. The loan-to-value (LTV) ratio is the value borrowed in relation to the value of the property.
For example, if you’re purchasing a property worth £200,000, you’ll need a deposit of £50,000 to make up the remainder. This is a 25% deposit, and therefore the LTV ratio is 75%.
Do I have to have a deposit?
You don’t have to have a deposit, but it means that you’re very limited in choice of mortgages. You’d likely need a family mortgage where a parent puts forward a deposit for you and after a few years they can get their money back.
Can a bad credit history affect the amount of deposit needed?
A bad credit history poses you as a higher risk to lend to, and therefore you’ll find yourself with a smaller choice of mortgages and they may also need higher deposits. Examples of credit issues include late payments, defaulted payments, repossessions, CCJs, payday loans, and bankruptcy.
Factors affecting a £150k mortgage application
Property type
If the property you’re hoping to purchase is of non-standard construction, like timber framed, they’re higher risk to insure for reasons like fire safety. Therefore, you may find it harder to get a mortgage.
Age
Sometimes there are age limits to mortgages, for example some lenders won’t accept anyone over 75.
Type of income
Mortgage lenders favour those in permanent full time employment with a large salary. However this can’t be the case for everyone. If you’re self employed, you can look for specialist lenders to try and still get good mortgage rates.
Second home
If you already own a property, you can be seen as higher risk when purchasing a second, because your income will be stretched further. Therefore, you may find that you need a larger deposit.
Credit rating
If you have a bad credit history, it is still possible to get a mortgage. Just bear in mind that it’s likely to be worse rates or a higher deposit.
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I began writing for Property Press Online in October 2019. Particular areas of interest are housing market news and new developments in the market.
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