Repayments on a £40,000 Mortgage

Find out what the monthly repayments could be on a £40,000 mortgage and what factors can influence this amount.

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Pete Mugleston Nathan Porter

Author: Pete Mugleston - Mortgage Advisor, MD

Reviewed By: Nathan Porter - Independent Mortgage Advisor

Updated: November 30, 2023
October 3, 2022

If you need to borrow £40,000 for a mortgage, you’ll want to know how much that potentially costs you each month. You can find out right now by using our mortgage repayment calculator here.

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Mortgage Repayment Calculator

Our mortgage repayment calculator can tell you how much your mortgage will cost you each month and overall. Enter the amount you’re borrowing, the term length and interest rate, and our calculator will do the rest.

Enter the amount you're borrowing
Enter the mortgage rate, 5.5% is a typical rate currently but this can vary
Enter the mortgage term, 25 years is the average but lenders can offer shorter and longer terms

Monthly Repayments:

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.

In this article, we’ll also explain what factors affect the costs of borrowing £40,000 and how, by using the services of an experienced mortgage broker, you can make sure you get the best deal for your circumstances.

How much does a £40,000 mortgage cost per month?

There is no single answer to this question as it depends on the terms of the mortgage deal you opt for, but to give an example based on typical market conditions at the time of writing (October 2023), a £40,000 mortgage with a 5.5% interest rate and a 25-year term would cost £246 per month.

However, the major factors that determine your exact monthly mortgage repayments are:

The lowest rates are reserved for applicants with a large deposit (typically 25%-40%), a clean credit record and clear evidence of affordability. The lower your interest rate, the lower your monthly payments and overall cost of borrowing will be.

Mortgages can run for up to 40 years (depending on your age and the lenders’ age cap). Borrowing over a longer term will bring down your monthly repayments but mean you pay more interest overall. A shorter term will mean higher monthly payments but less total interest.

The objective is to find the shortest term that comfortably fits with your budget for the monthly mortgage repayments.

The type of mortgage you take out will also influence your monthly repayments:

  • Fixed rate: When you take out a fixed rate mortgage, you lock that rate in for a specific period of time, which makes monthly budgeting much easier as repayments remain the same throughout.
  • Tracker rate: Usually a set percentage above the Bank of England base rate so tracker mortgage repayments can go up or down as and when the base rate changes. Again, this option will have a set period – typically 2, 3 or 5 years.
  • Interest-only: Interest-only is the cheapest repayment method in terms of monthly payments as this consists only of the interest element, but it will leave you with the full capital amount borrowed still owing at the end of the term, for which you will need a separate repayment vehicle.

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How to get a £40,000 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 straight away to the right broker by simply making an enquiry online.

They’ll be able to help with:

  • Working out how much you can borrow. You may think £40,000 is the maximum you can borrow for a mortgage but that might not be the case. A mortgage broker, using typical lender salary multiplier calculations, will be able to quickly work this out for you.
  • Deposit requirements. Your broker will be able to outline what deposit most lenders would require for this size of 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.
  • 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.
  • 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, recent bank statements, personal ID etc.

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Example repayment calculations

Below are some illustrations of how the rate and length of your mortgage affect monthly repayments. All payments are based on a mortgage of £40,000.

For interest-only mortgages the repayment remains as is regardless of the term. So, for example the repayment shown for 6% – £200 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.

£40,000 Mortgage 5 Year Term 10 Year Term 15 Year Term 25 Year Term 30 Year Term 40 Year Term Interest-only Repayment
3% £719 £386 £276 £190 £169 £143 £100
4% £737 £405 £296 £211 £191 £167 £133
5% £755 £424 £316 £264 £215 £193 £167
6% £773 £444 £338 £258 £240 £220 £200

*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 on to a different rate or move from either 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% (October 2023) 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 comes back down in the future then mortgage lenders should follow suit and reduce their rates too.

Other costs to consider

Of course, home buying involves a range of costs which need to be factored into your application in addition to your monthly repayments.

These include:

  • Arrangement fee: Sometimes called a ‘product fee’, most mortgages include one. This can usually be paid upfront or added to your loan and is likely to be at least £1,000.
  • Booking fee: This is typically between £100 and £200. Not all providers charge this and a broker will make sure it is a consideration when working out your best deal.
  • Valuation fee: This is different from your survey. It is instructed by the lender as they need to confirm the property value before approving a deal. This is usually around £300.
  • Survey: Depending on the type of survey you opt for, it can cost anywhere between around £400 and £1,500.
  • Stamp duty: This is a tax you pay to the government and is based on the price you pay for the property. Properties bought for less than £250,000 are not subject to stamp duty.
  • 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 so may not be relevant if you are only borrowing £40,000.
  • Solicitors fee: Also known as the ‘conveyancing fee’, this is the amount you pay your solicitor for their work on the deal. These can vary considerably but as a general guide, expect to pay somewhere between £800 and £1,500.
  • Broker fees: If you decide to use their services a broker will typically charge either a percentage of the amount borrowed (usually up to 1%) or a fixed-fee (between £500-£1,000 depending on the complexity of the application).

To find out more about what other costs to expect when arranging a mortgage, take a look at our in-depth guide to mortgage fees.

Get matched with the right mortgage broker

The only way to guarantee the best deal on your mortgage is to speak to a broker that fully understands your circumstances and has access to the entire UK mortgage market. Even on a mortgage of £40,000, it’s quite possible to end up paying a lot more than you should if you don’t find the right deal.

Our broker matching service will pair you up with a broker who is experienced in helping people like you no matter how niche your situation. They will fully cost each potential deal to work out which really is the cheapest.

To get matched with your ideal broker, call today on 0808 189 2301 or enquire online to arrange a free, no-obligation chat.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

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Pete Mugleston

Mortgage Advisor, MD

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