Repayments on a £30,000 Mortgage

The repayments on a £30,000 mortgage will vary depending on your mortgage type. Your mortgage repayments will be determined by the length of your term, the interest rate, and the type of mortgage you get.

A longer term will mean smaller monthly repayments but will result in you paying more in the long term. The higher the interest rate, the more you’ll pay and if you get an interest-only mortgage, for example, you’ll only cover the interest charges, not the principal amount borrowed.

In this article, we’ll look at the monthly repayments you can expect for a £30,000 mortgage, the annual income, and the deposit amount you’ll need to apply for this mortgage. As well as how using a mortgage broker can help you obtain the lending you need at the most competitive interest rates.

How much would a £30,000 mortgage cost per month?

At the time of writing (April 2024) the average monthly repayments on a £30,000 mortgage are £175. This is based on current interest rates being around 5%, a typical mortgage term of 25 years, and opting for a capital repayment mortgage. Based on this, you would repay £52,613 by the end of your mortgage term.

Bear in mind, if you secure a mortgage with a longer term, 30 years for example, the total amount you pay back will be higher but your monthly repayments will be smaller.

Speak to one of the advisors we work with for a representative idea of what you might repay. They can help you secure favourable terms and lower repayments than you might get if you try to secure a mortgage by yourself.

How much do you need to earn to get a £30,000 mortgage?

The amount you can borrow is based on your salary. Most lenders will loan around 4 or 4.5 times your annual income, while some may loan 5 times or even 6 times your annual salary. Based on this, you’d need an annual income of around £6,660 to £7,500 to be approved for a £30,000 mortgage.

The circumstances in which you’re likely to be loaned 6 times your annual salary are if you already have a large deposit, and/or the house you’re looking to purchase is valued at £100,000 or less.

A £30,000 mortgage is considered to be low. You’ll likely have a large deposit or specific circumstances, such as being a retiree looking to downsize to a smaller property or £30,000 is the outstanding figure ahead of a remortgage.

These figures are below the average UK annual salary, currently £34,900 (April 2024). If you earn less than the average salary or the figures listed above, you might want to consider getting a joint mortgage with someone. By doing so, your combined earnings can be used for this calculation to increase your chances of approval if you earn below £10,000 a year.

In these circumstances, it’s best to consult with a broker who can indicate which lenders can offer this and whether you’d meet the lender’s affordability criteria.

How much deposit do you need for £30,000 mortgage?

As a £30,000 mortgage is a small sum, the deposit requirements will vary from person to person. You might have a large deposit and want a smaller mortgage for lower monthly repayments.

Or, you could be looking to purchase a house valued at £100,000 or less and only require a small mortgage. Generally, residential mortgage lenders require a minimum deposit of 5% to 10%. This percentage is based on the property value, not the mortgage amount.

However, as it’s rare for a house to be valued at under £50,000 in the UK, you’re unlikely to secure a £30,000 mortgage with a deposit in this range. You’ll need a large deposit to get approved to show lenders you’ll have no issues repaying the loan.

Currently, residential mortgage lenders impose minimum deposit requirements ranging from 5% to 10%. This percentage is based on the property value, not the mortgage amount.

For instance, if you were purchasing a property valued at £80,000 (rather than borrowing this exact amount), your minimum deposit would fall within the range of £4,000 to £8,000. Consequently, your mortgage amount would be between £76,000 and £72,000.

In this scenario, the lower deposit would result in higher monthly repayments. But with a larger deposit, you’d have lower monthly repayments and a lower loan-to-value ratio, which makes you more likely to qualify for competitive interest rates.

If you encounter bad credit issues or are interested in a mortgage for a non-standard construction property, you might need a higher deposit—around 25%. Keep in mind that these factors will limit your choice of lenders.

For buy-to-let mortgages, most lenders typically require a minimum deposit of 20%. However, an experienced mortgage broker in this field may be able to identify lenders who ask for less.

You can use our loan-to-value calculator below to see how the above scenarios play out

How to get a £30,000 mortgage

Once you’ve found a property and made some calculations, your next step should be to find an experienced mortgage broker as this will boost your chances of getting approved at the best terms available.

Using our free broker-matching service you can speak to the right broker straightaway by simply enquiring online.

They’ll be able to help with:

• Deposit requirements: The circumstances in which you’ll be approved for a £30,000 mortgage, will likely involve you having a large deposit and £30k being a top-up on top of this. If you’re a high-net-worth individual, for example, saving won’t be an issue. But putting aside 10% to 20% of your monthly income will help you build the large deposit you’ll need to get approval for a £30,000 mortgage.
• Downloading and optimising your credit reports: It’s important to review your credit history before you apply for a mortgage, checking for any inaccuracies or outdated information that can be removed beforehand.
• Gathering all the necessary paperwork required for your application: Your broker will be able to guide you through the application process and all the typical documents required – proof of income, at least three months of bank statements, personal ID, proof of address, evidence of deposit, latest P60 form etc.
• Working out how much you can borrow:  Based on typical lender salary multiplier calculations, you may think £30,000 is the maximum you can borrow for a mortgage but that might not be the case. A mortgage broker can determine whether you can borrow more at better interest rates by considering your circumstances and whether you’re eligible for a better deal from lenders.
• Finding the right lender and securing the best deal for you: Your mortgage broker will be able to identify those lenders offering the best interest rate terms available across the whole market. This will save you time and, potentially, some money too.
• Guiding you through the process: Getting a mortgage can be difficult, especially if this is your first application. The right mortgage broker can help you with any issues you may face along the way, look after your interests and be a lifeline in case anything goes wrong.

Example monthly repayments for a £30,000 mortgage

Take a look at our repayment table below to see how the cost of a £30,000 mortgage can vary based on different rates and term lengths.

For an interest-only mortgage, you can expect repayments to be substantially lower and remain the same regardless of the term length. This is because the capital amount borrowed must be repaid in full, using a separate repayment vehicle, at the end of the term.

*For the purpose of this table, we assume the interest rate stays the same for the full length of the mortgage. Interest rates can change if you decide to remortgage on to a different rate or move from a fixed or discounted deal on to the lender’s standard variable rate (SVR).

With the Bank of England base rate currently at 5.25% (April 2024) and the average mortgage rates between 5%-6% the repayment figures under these columns in the table above would be the most realistic at present. However, as the base rate falls in the future, mortgage lenders should follow suit and reduce their rates too.

Remember, longer terms while maintaining the same interest rate, will result in a higher total amount being repaid.

Factors that affect monthly repayments

Here are some of the key criteria that could have an impact – both directly and indirectly – on your mortgage repayments:

Interest rates

The rate you secure will significantly influence your monthly costs. In general, a higher interest rate means higher monthly payments for a £30k mortgage. Rates available on the market can vary, so it’s crucial to work with a lender offering the most competitive rate for your circumstances.

Fixed or Tracker

You’ll have the option to choose between a fixed rate vs a tracker mortgage. Typically, a fixed rate will be higher, resulting in increased monthly repayments. But, locking in a rate can allow you to better plan your finances.

Term Length

The duration of your mortgage affects rates and directly impacts your monthly expenses for a £30k loan. A longer term usually reduces monthly repayments but may result in higher overall payments over the mortgage’s life.

Your age

While you can obtain a mortgage at almost any age, having time on your side can lead to better deals from lenders. This could mean lower rates and more manageable monthly repayments for your £30,000 mortgage.

The role your credit score plays

Before applying for a mortgage, consider downloading your credit reports. Your credit scores play a crucial role in the number of lenders willing to consider your application and indirectly affect the rates offered. If you have bad credit, specialist lenders are available to assist.

If you’re unsure what your credit score is or want to check before you go any further, use the free tool below:

Other mortgage costs to consider

There are a few other additional charges that may impact the monthly costs when setting up a mortgage worth £30,000. Speaking to a mortgage broker about the costs listed below will give you more information about what they entail and ensure there are no unpleasant surprises.

Product fees

Some mortgages come with fees to set them up. These fees can include a booking fee, an arrangement fee (between £0 and £2,000), and a valuation fee (around £300). If you choose to include these mortgage fees in your total loan, you won’t have to pay anything upfront. However, including them will increase the amount you pay each month.

Insurance

When considering a mortgage, you’ll likely need to account for additional insurance costs. These may include:

• Home insurance: Covers your property against damage or loss.
• Life insurance: Provides coverage for the mortgage in case of your death.
• Income protection: Helps if you’re unable to work due to illness or injury.
• Critical illness cover: Assists if you’re diagnosed with a serious medical condition

Stamp duty

Depending on the home’s value and whether it’s your main residence, you might be required to pay stamp duty. First-time buyers or those purchasing residential properties under £250,000 are exempt from this tax.

Legal fees

These costs typically arise during the purchase process. While they don’t directly impact monthly payments, they are an additional expense to consider in your calculations.

Why use Online Mortgage Advisor?

If you are looking to borrow £30,000 to fund a property purchase, discussing your financial situation with a broker is one of the best ways you can secure such a mortgage. They will work through your needs and requirements with you as well as determine which provider is most suitable.

Our broker matching service can connect you with the right broker who can help in every aspect of your mortgage application. Call us today on 0808 189 2301 or make an enquiry so we can put you in touch with an expert.