£400,000 Mortgages and the Monthly Repayments

In this article, you can find out how much the monthly repayments could be on a £400,000 mortgage, what factors might affect how much you pay and why it makes sense to speak to a mortgage broker before committing to any interest rate deal.

How much does a £400,000 mortgage cost per month?

There are several factors to consider when calculating the monthly repayments on a mortgage of this size. Each lender has their own specific criteria but for a rough estimate based on current market conditions (October 2023), a £400,000 mortgage with a 5.5% interest rate and a 25-year term will work out at £2,456 per month.

You can use our online mortgage repayments calculator to see other variations of how much a £400,000 mortgage might cost you each month with different terms and interest rates.

Factors that could affect your monthly mortgage repayments

Each of the following factors outlined below will have a direct impact on your mortgage repayments.

Interest rate

Securing the best (lowest) interest rate terms available will, of course, mean you’re repayments are as low as they possibly can be, based on the market conditions at the time you apply.

The strength of your application and deposit size will determine how many mortgage lenders are willing to consider you for a mortgage and, as a result, this means you’ll have access to the best available rates.

Other factors, such as your credit history, age and employment status can also have an impact on the interest rate you qualify for as this could result in a smaller pool of lenders willing to consider you for a mortgage.

If you don’t match the eligibility criteria for high street lenders, you may still be able to get a good rate by approaching a specialist lender that is more sympathetic to your situation. This can include applicants looking for bad credit mortgages or mortgages for self-employed people. The best way to find these lenders is by using the services of an experienced mortgage broker. 

Mortgage term

Not all mortgages are taken out over 25 years. If you can prove affordability isn’t a problem, you can often lower your term, so your monthly payments are higher, but you save on interest over the term of your loan.

Likewise, if affordability is tight but you need to borrow £400,000 for the home you really want, you can, possibly, extend your term to a maximum of 40 years to make sure your monthly payments are manageable. This will mean you pay more in the long run, but you may be able to get a better rate and shorten your term when you remortgage.

Example Calculations

The table below shows how monthly payments on a £400,000 mortgage can change depending on the rate and term.

For the purpose of the table above 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).

Repayments for interest-only mortgages remain the same regardless of the term. So, for example, the repayment shown for 6% – £2,000 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.

With the Bank of England base rate currently at 5.25% (September 2023) and the average mortgage rates between 5% to 6% the repayment figures along these rows in the table above would be the most realistic at present. This can obviously change as and when the base rate is changed. 

Mortgage Type

How you choose to pay back your mortgage is also a factor that can affect your monthly repayments.

Broadly speaking there are three different types available:

• Fixed-rate mortgages: These types of mortgages make budgeting easier as you tie in a fixed rate for a fixed term so you know exactly what your monthly payments will be for a number of years (usually between two and five).
• Variable rate mortgages: As the name suggests, these types of mortgages have rates that can vary rather than remain fixed. As such they can be slightly more risky than a fixed-rate mortgage but can result in lower monthly repayments during the term. Types of variable rates include tracker mortgages (see below), discounted rate mortgages and standard variable rate (SVR) mortgages.
• Tracker mortgages: This type of mortgage has a variable rate that usually tracks the Bank of England base rate (typically a set percentage above the base rate). Some lenders include a minimum and maximum rate to give you peace of mind. Rates are usually lower than fixed rates on offer at the time of taking out your mortgage. Many lenders offer discount tracker rates to help reduce your monthly payments.

How a broker can help

With a large mortgage like this, getting the best possible rate is essential to ensure you don’t pay more than you need to. But with so many variables, finding the right deal according to your personal circumstances can be a challenge.

An experienced broker will be able to find the right deal for you by checking the whole market for the most fitting lender and product saving you a lot of time and, potentially, some money too.

Using our free broker-matching service you can speak straight away to the right broker by simply making an enquiry online. They’ll also be able to help with:

• Establishing if you’re income is enough to qualify for the mortgage you need, using the latest income multiplier calculations used by lenders
• Downloading and optimising your credit reports to ensure there is no bad credit recorded or inaccurate information that could hinder your application
• Gathering all the necessary paperwork required for your application – proof of income and deposit, copies of bank statements, proof of ID etc.

Other costs to consider

When buying a property that requires a £400,000 mortgage, there are several other costs that need to be considered:

Arrangement fee:
Most mortgages include an arrangement fee (also known as a ‘product fee’). These fees are usually dependent on the complexity of the application and can range from anywhere up to around £2,000.

In some cases, these can be added to your mortgage, but that will increase your monthly payment slightly and you will end up paying interest on the fee.

Booking fee:
Not all mortgages require a booking fee, but those that do will typically ask for around £100 – £200.

Valuation fee:
Lenders insist on a valuation fee to confirm the purchase price is right and protect their investment. This is likely to cost you in the region of £300.

In addition to these costs, there are other fees to consider, such as stamp duty and conveyancing. See our dedicated article on mortgage fees for a full list of the other charges.

All of these fees will affect your overall cost of borrowing and a broker will be able to provide you with a full breakdown of the costs for each deal to ensure you make a fully informed decision.

Get matched with your ideal mortgage broker

With so much to think about when taking out a £400,000 mortgage, finding the right broker is essential.

Our broker-matching service removes the burden of trying to find the right specialist and introduces you to one who has a proven track record of helping people in your situation get the best mortgage deal.

When you enquire, we’ll take some basic details and then pair you with the ideal broker according to your circumstances and those of the property you are looking to buy or remortgage.

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