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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 8th September 2020*

Many people assume that a £700 a month mortgage is simply out of their reach, but do all mortgages demand large monthly payments?

Poor advice and misinformation are rife on the internet, leaving many with the belief that, without a substantial deposit, they won’t be able to find an affordable mortgage. 

The good news is that we have helped hundreds of people find a mortgage for £700 a month. 

Jump to our calculator journey to establish what you can afford, the costs and which of the best deals you’ll qualify for.

To help you make an informed decision about where to find a lender who can provide you with a mortgage for £700, we’ve created this handy guide which includes:

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What mortgage can I get for £700 per month? 

Before you apply for a mortgage, you need to ask yourself what type of mortgage product would be best suited to your circumstances and needs.

Each mortgage product will have its advantages and disadvantages, some of which can be beneficial when opting for a mortgage with smaller payments of £700 per month.

However, before making a decision, always seek the help of a professional broker who can look at your affordability and circumstances to determine which option would be most viable for you. 

Interest-only mortgage

An interest-only mortgage is sometimes taken out by homeowners who can afford to pay off the interest of the loan for a specific period before they pay the principal at the end of the term. This is a preferable option for those who want to make smaller loan payments.

For example, a borrower takes out an interest-only mortgage for £200,000 with a 4% interest rate over 25 years. Their monthly interest payments would equate to £666.

However, because they would have only paid the interest of the loan, their mortgage debt would still be payable. 

Therefore, an interest-only mortgage can initially make a mortgage more affordable but in this case, it would mean that the borrower would still owe the lender £200,000, which would be payable usually at the end of the mortgage period (25 years in this example.)

To learn more about interest-only mortgages speak to a mortgage advisor for guidance on which product would be most suited to your situation. 

Repayment mortgage

This is the most commonly sought-after mortgage product. A repayment mortgage requires the borrower to pay both the interest and the capital of the loan each month. 

This can make the monthly payments higher and therefore to make the mortgage more affordable, a smaller loan would need to be taken out.

For example, a borrower takes out a repayment mortgage for £135,000 with a 4% interest rate over 25 years.

Their monthly payments would equate to £712 and unlike an interest-only mortgage, the loan would be paid off in full after 25 years. 

For more information on the differences between a repayment mortgage and an interest-only mortgage, see our guide.

How much mortgage can I get for £700 per month?

When calculating how much you can afford to borrow for a mortgage, you will also need to consider how long you want your mortgage agreement to last.

Most mortgage agreements last for 25 years, so if you were to pay £700 a month with a fixed interest rate of 3.48% over the course of 25 years, you would have paid £209,837.

This end figure would include a mortgage debt of £140,000 + the total interest, which would be £69,837.

Can I get a £700 a month mortgage on my income?

Your income will be assessed by a mortgage lender to determine how likely it is that you can afford your mortgage payments.

Some lenders have a different approach when it comes to calculating a borrower’s affordability based on their income. This can be helpful for freelance borrowers who might not necessarily have a steady or reliable source of income. 

That being said, the majority of lenders will lend based on income multiples, with most capping the amount they lend to 4-4.5 x the borrower’s salary

How much mortgage can I get for £700 per month on my salary?

As an example, if you earned £35,000 a year, you could potentially borrow at least £140,000 for a mortgage. 

If this were taken over a period of 25 years with an interest rate of 3.48%, your monthly mortgage payments would equate to £700. 

However, there are also lenders who will consider lending 5 x the amount of annual salary and in a handful of cases, often when the borrower earns a substantial salary and has an impeccable credit rating, there are those who will consider loaning up to 6 x. 

To learn more about how your income could affect the amount of mortgage you are eligible for and therefore the sum of your monthly payments, speak to an advisor. 

How do I calculate my monthly payments?

You can use our online mortgage calculator to get a rough idea of what your repayments could be, but be sure to speak to an expert and request bespoke calculations based on your profile as a borrower.

Can I get a 30-year mortgage for £700 per month?

Yes, you may be able to apply for a larger mortgage if you can find a lender who agrees to a longer mortgage term.

For example, by still paying £700 a month with a fixed interest rate of 3.48% over the course of 30 years, you would be able to get a mortgage for £150,000. 

The total interest over the course of the loan would be £102,012, meaning the overall figure that you would pay the lender would be £252,012.

Please note that the above data is for demonstrative purposes only. Consult your lender or broker for the most up-to-date information and rates.

What factors can affect my £700 a month mortgage?

The amount that a lender may agree to loan you depends on numerous factors, and every lender has a different stance on what they deem as an ideal applicant.

Before establishing how much they can loan you, a lender may look at your affordability.

This can involve questions about your: 

Can I get a £700 a month mortgage with bad credit?

Whilst it’s true that credit issues on your report can affect your ability to take out a mortgage, it doesn’t necessarily mean that you won’t be able to get a mortgage with £700 a month repayments. 

Firstly, not all lenders are the same when it comes to how they consider ‘bad credit’ applicants. 

In fact, each one will have a different approach and as a result, will be able to provide varying rates, deposit sizes and loan amounts. 

‘Bad credit’ can range from lower risk to higher risk for lenders, which is why some may have no issue with a late payment on your report whilst for others, this could result in an instant rejection.

Can the property type affect my ability to get a £700 per month mortgage?

Potentially yes. Some types of buildings are more difficult to maintain and, if damaged, can be more expensive to repair. The cost of said repairs can affect some borrower’s ability to keep up with their mortgage payments.

This can cause some lenders to be cautious when lending to borrowers for a non-standard construction build (usually anything that isn’t built from bricks and mortar).

Whilst some lenders may request higher deposits for these types of builds, there are those that may flat out refuse to loan for them.

Make an enquiry and we’ll refer you to a non-standard property expert for the right advice. 

Talk to an expert about £700 a month mortgages

If you’re still wondering, “What size mortgage can I get for £700 per month?” then talk to a broker today.

They’ll be happy to answer any questions and resolve any concerns you have about which mortgage product or lender is best suited for your circumstances.

Call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Updated: 8th September 2020
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.