£150,000 Mortgage : Monthly Repayments & Income Requirements

The repayments on a £150,000 mortgage vary depending on the mortgage type. Your mortgage repayments will be determined by the length of your term, interest rate, and the type of mortgage you get.

A longer term will mean smaller monthly repayments but will result in you paying more overall. 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 for a £150,000 mortgage, and how much annual income you’ll need for this amount. As well as the factors that might affect how much you pay and why using a mortgage broker can help you secure the lending you need at the most competitive interest rates.

How much does a £150,000 mortgage cost per month?

At the time of writing (April 2024) the average monthly repayments on a £150,000 mortgage are £877. 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 £263,066 over the mortgage term.

However, if you secure a mortgage with a longer term, this will result in smaller monthly repayments but you’ll pay more in total over the term of the mortgage.

To get an idea of what you might repay, talk to one of the advisors we work with. 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 £150,000 mortgage?

The amount you can borrow is based on your salary. Most lenders will loan 4 and 4.5 times your annual salary. You’d need an annual income between £35,000 to £40,000 to be approved for a £150,000 mortgage. This is just above the average UK annual salary, currently £34,900 (April 2024).

This might be a bit high for some but you can apply for a joint mortgage, with your partner for example. This way your combined earnings will be used by lenders and allow you to borrow a larger amount.

Some more risk-averse lenders limit income multiples to three times income. Others use higher income multiples such as 5 times your annual salary and it’s not uncommon to find specialist lenders who will consider six times income. In this circumstance, you’d need to earn £25,000 to be eligible for a £150,000 mortgage. But this is often only available to certain professions, such as a doctor or lawyer, with high or stable income.

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

Example calculations

This table shows how your income and the provider’s income multiples combine to show your maximum borrowing capacity:

The above table is for comparative purposes only. You should talk to your mortgage lender or broker for the most up-to-date information on affordability criteria.

If you’d like to see how this works out for yourself, based on your annual income, take a look at our mortgage affordability calculator below:

How much deposit do you need for a £150,000 mortgage?

Currently, the minimum deposit requirements imposed by lenders for a residential mortgage are between 5%-10% – this is based on the property value NOT the mortgage amount.

So, if you were buying a property with a value of £150,000 (rather than borrowing this amount) you’d need a deposit of between £7,500-£15,000 at least, and then your mortgage would be between £142,500-£135,000.

It’s not completely out of the question to secure a mortgage for £150,000 with no deposit, but this is extremely rare.

For a more complex application, where there may be a bad credit issue, which will reduce the pool of lenders available, you may need a higher deposit of at least 25%.

For a buy-to-let mortgage, most lenders ask for a minimum of 20%, although a mortgage broker with experience in this area should be able to identify some who will ask for less.

The higher your deposit the more likely you are to qualify for the most competitive interest rates and mortgage terms as lenders will reserve their best rates for mortgages with the lowest loan-to-value (LTV). Most lenders offer a maximum LTV of 95%, which means you’d need a minimum deposit of 5%.

Some lender’s limit will be lower than 95% but you’d need to put down a bigger deposit.

You can see how this works on our calculator below.

How to get a £150,000 mortgage

After you’ve found a property you like and made some calculations, your next step in your mortgage application should be to find a mortgage broker with experience in arranging mortgages of this amount 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 by simply enquiring online. They’ll be able to help with:

• Deposit requirements: You’ll need to save a minimum deposit of 5% to 10% for a £150,000 mortgage. How much this figure will be depends on the value of the property, but a 10% deposit on a £150,000 house would be £15,000. A simple way to help you save money is to set up a savings account and put a percentage of your monthly wage, around 10 to 15%, into the account each month.
• 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. You might assume that £150,000 is the maximum you can borrow for a mortgage based on typical lender salary multiplier calculations. However, this might not be the case. A mortgage broker can assess your circumstances and eligibility for better deals from lenders, potentially allowing you to borrow more at better interest rates.
• 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.
• Navigating the Mortgage Process: Applying for a mortgage can be challenging, especially if it’s your first application. The right mortgage broker can assist you with any issues you may encounter along the way, safeguard your interests, and provide support if anything goes wrong.

Example monthly repayments for a £150,000 mortgage

The below table shows how much impact the interest rate and term of your mortgage can have on your repayments.

For interest-only mortgages, the repayment remains as is regardless of the term. So, for example, the repayment shown for 6% – £750 per month – would be the same if you opted for a 15-year term or a 30-year term as the capital owed doesn’t reduce and is paid off in full at the end using a separate repayment vehicle.

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 remortgage to a different rate or move from a fixed or discounted deal 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 would be the most realistic. However, as the base rate falls in the future, mortgage lenders should follow suit and reduce their rates too.

Factors that affect monthly repayments

The mortgage term and interest rates that you qualify for will depend on a range of factors that could impact upon your repayments – both directly and indirectly – such as:

Term Length

The longer the term, the lower your payments will be than for a shorter term but with more interest to pay overall.

For example (using an interest rate of 5.5%), if you repay £150,000 over 10 years, your monthly repayments would be £1,628, whereas the same amount borrowed over 35 years would equate to repayments of just £806, but the total amount of interest paid over 35 years would be much higher.

Your age

Most lenders, especially on the high street, impose a maximum age limit on their mortgage products, meaning you’ll typically need to have finished repaying your mortgage by the age of 75-85.

The older you are, the shorter the term is likely to be. However, not all lenders apply maximum age limits, so if you’re an older borrower, you might be able to achieve the term you want with the right lender. Alternatively, you can look at equity release products, which are intended for over 55s.

Fixed or tracker rate

You’ll also have the option to choose between a fixed rate vs a tracker mortgage. Usually, a fixed rate will be higher, increasing your monthly repayment. But, locking in a rate can allow you to better plan your finances.

Credit score

Most lenders reserve their most competitive interest rates for applicants with a strong credit score. It’s possible to get a bad credit mortgage, however, the interest rates are typically higher and the pool of lenders willing to consider your application will be lower.

Income type

If you’re a PAYE earner, you may get slightly better rates on the high street than self-employed applicants, as lenders consider your income to be more stable. If you’re self-employed, however, don’t worry, plenty of lenders specialise in self-employed mortgages and will offer you competitive rates.

Type of property

As lending is all about risk, even certain property types can be considered riskier than others. You’re likely to be offered less competitive rates if you buy a property of non-standard construction or a second home, as they are both deemed riskier purchases.

A non-standard construction could be viewed by a lender as risky because it may be harder to sell in the event of a repossession. Purchasing a second home could be risky as it may overstretch the applicant’s finances.

Mortgage repayment method

This table demonstrates how much lower payments on £150,000 are on an interest-only mortgage, versus a capital repayment method (based on an interest rate of 6%). However, it’s important to note that this is because you do not repay any of the original loan over the term of your mortgage.

Instead, at the end of the term, the entire loan becomes payable in one lump sum, and you’ll need a suitable repayment vehicle to qualify for this type of mortgage.

(You’ll note that repayments on an interest-only basis remain unchanged regardless of the term – that’s because the capital owed to the mortgage lender stays the same throughout the term and is repaid in full, using a separate repayment vehicle at the end).

Additional costs to consider

When arranging a mortgage, it’s important to bear in mind that the monthly repayments will not be your only outgoing. There are several other costs involved with the arrangement of a mortgage, as well as the ongoing costs of home ownership to consider when planning your budget.

Below, we’ve listed some of the costs you’ll need to consider:

• Solicitor/legal fees: This fee is typically between a few hundred and a few thousand pounds, depending on the property type and searches required
• Arrangement fees: This type of fee will not apply to all lenders or products, but it’s important to find out if it applies, as it can be between 0.5%-1%% of the total loan amount. So between £750-£1,500 for a £150,000 mortgage.
• Broker fees: If you decide to use the services of a mortgage broker their fees will also need to be taken into account. The amount will depend on the complexity of the application. Typically, a mortgage broker will ask for a flat fee – usually between £500-£1,000 or a percentage of the amount borrowed – usually between 0.5%-1%.
• Stamp duty: This is the tax levy on residential property purchases. The tax rates for stamp duty are tiered – the higher the purchase price, the higher the percentage you are charged.
• Land registry fee: This is essentially an admin fee you pay to the Land Registry for them to change the register entry to your name. It only applies to properties valued at £100,001 and above. The fee ranges from £45 to £145 depending on the property’s value.
• Valuation fee: Your lender will carry out a valuation to check you’re paying what the property is worth. This will typically cost you anywhere between £250 and £1,500, depending on the complexity involved.

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

Why use Online Mortgage Advisor?

Finding a mortgage broker with the exact experience you’re looking for is not always simple, but our broker-matching service does the hard work for you. Whether you’re concerned about self-employment, age, adverse credit, or you’re looking to buy a less traditional property, such as a timber-framed building, we’ll be able to pair you with a broker who has the most knowledge in the area you need.

Every broker we work with provides an initial consultation completely free of charge, and you’ll only pay beyond that if they secure you a mortgage. Call now on 0808 189 2301 or make an enquiry, to take advantage of our free 5-star matching service.