In this article, we will look at what sort of mortgage you can get for £3,000 per month and some steps you can take to make your budget go even further.
What mortgage can you get for £3,000 a month?
Some people might be able to borrow £650,000, while for others it might be over £1 million. The answer to this question depends on the property value, deposit size, mortgage rate, repayment term and your own personal financial situation, with lenders generally only prepared to borrow either 4.5 times or 5 times your annual income.
To give just one example, if you wanted a mortgage for a £1 million property, and you could pay £450,000 upfront, it may be possible to borrow the remaining £550,000 at an initial rate of 4.5% and repay over 25 years, with payments of around £3,000 a month.
We will look at these factors in detail through the article, but the table below shows how these different variables can contribute to a £3,000 monthly repayment:.
|Mortgage value||Mortgage term||Example rate||Approx. monthly payments|
For the purpose of this table, we are assuming the interest rate stays the same for the full length of the mortgage. Interest rates can change if you decide to remortgage to a different rate or move from either a fixed or discounted deal on to the lender’s standard variable rate (SVR).
You can get a much-tailored understanding of how much you could borrow by using the calculator below
Mortgage Repayment Calculator
Enter the amount you’re borrowing, the term length and interest rate, and our calculator will show you your monthly payment.
Total amount paid at end of term:
Get started with an expert broker to find out how much they could help you save on your mortgage repayments.
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Factors impacting mortgage size and repayments
Each of the following factors has a relationship with the size of your monthly mortgage repayments.
Property value and deposit size
Naturally, the size of your monthly repayments will tend to increase if you buy a more expensive property, but a higher deposit could offset this. Higher deposits should also unlock better rates, as you’ll have a larger pool of lenders to choose from.
For example, if you’re a first-time buyer with a 10% deposit, you could potentially buy a £650,000 home (with a £65,000 deposit) and your initial repayments would be approximately £3,000 a month.
Whereas, if you’re further along the property ladder, and have been paying off a mortgage for many years, you might have built up a lot of equity in that time. With a deposit of £650,000, you could potentially buy a £1.2 million home at the same monthly repayments.
There are plenty of mortgage options with shorter or longer terms, ranging from 10 to 40 years.
Changing the mortgage repayment term has a huge impact on the size of your monthly repayments but will also change how much you spend overall. Shorter mortgages have higher monthly payments but will cost you less than a longer-term mortgage.
The following table shows the estimated mortgage borrowing, for the £3,000 monthly repayment and across the different terms. These figures are based on a 5% interest rate:
|10 Years||20 Years||30 Years||40 Years|
Mortgage rates are mainly dictated by the Bank of England base rate and the lower the rate, the less your monthly repayments. Your rate will depend on:
- Your deposit size. If you have a large deposit, you’ll usually be able to find a better rate than someone with a small deposit.
- Your credit history. If you have a good credit history, you’ll have more mortgages to choose from and may find a better rate than someone with bad credit.
- Your rate type. If you choose a fixed-rate mortgage (as most buyers do), you’ll pay a little more initially than someone who chooses a variable-rate mortgage.
- Your initial period. Fixed rates are usually guaranteed for a period of 2, 3, or 5 years, with some lenders offering lower rates for longer-term commitments, depending on the economic climate.
- Your lender. All lenders are free to establish their own rates, so it’s important to shop around to find the best available rates at the time
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Factors that determine affordability
One of the final hurdles in getting a £3,000 a month mortgage is passing the lender’s affordability checks. They will need to assess whether you can afford to repay the amount you’ve applied to borrow over your requested repayment term.
To do this, they’ll look at your income, spending, and debts. Your employment status, credit history, and profession can also affect your chances of approval.
One rule to bear in mind is that lenders typically cap the amount they’ll approve based on a multiple of your income. For most lenders, it’s 4-4.5 times your income. So, to buy a £700,000 with a £70,000 deposit, you would probably need an income of upwards of £140,000. If you’re applying for a joint mortgage, this would be your combined income.
You can use the mortgage affordability calculator to see how this could look for you, based on your own annual salary:
Mortgage Affordability Calculator
Simply enter your total household income below and our calculator will tell you how much a typical lender will allow you to borrow.
You could borrow up to
Most lenders would consider letting you borrow
This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.
Some lenders would consider letting you borrow
This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.
A minority of lenders would consider letting you borrow
This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.
Get Started with an expert broker to find out exactly how much you could borrow.
Finding a broker experienced in larger mortgages
As the examples we’ve discussed show, a £3,000 a month mortgage can look very different for different buyers. The unique details of your property purchase and financial situation all play a role in which mortgage is best for you.
That’s why it’s so important to get a broker who understands your needs and has experience in finding mortgages for buyers in similar circumstances. They’ll help you to tailor all of the variables to result in monthly repayments you can afford.
If you’d like to be matched with a specialist broker based on some of your personal details, we offer a free service to do just that. Then, you’ll be connected with them for a no-obligation chat so you can see if they’re right for you. To try it today, call us on 0808 189 2301 or make an enquiry.
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