Repayments On A £120,000 Mortgage

To help you budget for the future, find out how much a £120,000 Mortgage is per month by using our monthly repayments calculator. Or, you can read more about this topic below.

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
years

The monthly repayments on a £ mortgage would be

The total amount paid at the end of your mortgage term would be .

Importantly, the principal amount of £ remains outstanding and must be repaid at the end of the term.

You would need an annual household income of around to afford this mortgage. This is based on 4.5 times your income, the standard calculation used by the majority of mortgage providers.

Get started with an expert broker to find out how they could help you save on your mortgage repayments.

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Home Mortgage Repayments Repayments On A £120,000 Mortgage
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Jon Nixon

Reviewer: Jon Nixon

Director of Distribution

Updated: March 18, 2024

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

September 29, 2022

Repayments on a £120,000 mortgage will vary depending on your 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 in the long term. 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 you can expect for a £120,000 mortgage, the annual income, and the deposit amount you’ll need to apply for this mortgage. As well as how using a mortgage broker can help you obtain the lending you need at the most competitive interest rates.

How much will your £120,000 mortgage cost per month?

At the time of writing (March 2024) the average monthly repayments on a £120,000 mortgage are £702. This is based on current interest rates being around 5%, a typical mortgage term of 25 years, and most borrowers opting for a capital repayment mortgage.

Based on the above, you would repay £210,452 by the end of your mortgage term. Bear in mind, if you secure a mortgage with a longer term, 30 years for example, the total amount you pay back will be higher but your monthly repayments will be smaller.

Speak to one of our expert mortgage brokers for a representative idea of what you might repay. 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 £120,000 mortgage?

The amount you can borrow is based on your salary. Almost all lenders will loan around 4 or 4.5 times your annual income. You’d need an annual income of around £26,666 to £30,000 to be approved for a £120,000 mortgage.

This is below the average UK annual salary which is currently £34,900 (March 2024). If you earn less than the average salary or the figures listed above, you might want to consider getting a joint mortgage with someone. By doing so, your combined earnings can be used for this calculation.

Some lenders may also be willing to offer 5 times or possibly even 6 times annual salary. In these circumstances, it’s best to consult with a broker who can indicate which lenders can offer this and whether you’d likely qualify.

How much deposit do you need for a £120,000 mortgage?

Currently, residential mortgage lenders impose minimum deposit requirements ranging from 5% to 10%. This percentage is based on the property value, not the mortgage amount.

For instance, if you were purchasing a property valued at £120,000 (rather than borrowing this exact amount), your minimum deposit would fall within the range of £6,000 to £12,000. Consequently, your mortgage amount would be between £108,000 and £114,000.

While it’s rare, it’s not entirely impossible to secure a mortgage for £120,000 with no deposit at all.

However, if you encounter bad credit issues or are interested in a mortgage for a non-standard construction property, you might need a higher deposit—around 25%. Keep in mind that these factors will limit your choice of lenders.

For buy-to-let mortgages, most lenders typically require a minimum deposit of 20%. However, an experienced mortgage broker in this field may be able to identify lenders who ask for less.

Remember: The larger your deposit, the more likely you are to qualify for competitive interest rates. Lenders often reserve their best rates for mortgages with the lowest loan-to-value ratios.

You can see how this works on our calculator below.

LTV Calculator

This calculator will tell you what your loan-to-value (LTV) ratio is, based on the property's value, your deposit/equity and the amount you're borrowing.

Enter an amount in pound sterling
£
Property value minus your deposit/equity
£
Loan amount must be less than property value

Your Results:

Your LTV is

This means that most mortgage providers will consider your deposit amount to be more than satisfactory, but speaking to a broker is still recommended to ensure you get the best deal.

This means you’re likely to meet the deposit requirements at most lenders, but since many reserve their best rates for those with higher deposits, speaking to a broker is recommended.

Many mainstream mortgage providers would consider this high and be reluctant to lend. Applying through a mortgage broker may be necessary to find a specialist low deposit mortgage lender.

LTVs have a direct impact on the rates available to you - speak to a mortgage broker and find out how to get the best deal based on your ratio.

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How to get a £120,000 mortgage

Once you’ve found a property and made some calculations, the next step in your mortgage application should be to speak to a mortgage broker to ensure you get the best rate and deal on your mortgage. Make an enquiry with us and we will match you with the right advisor for free.

They’ll be able to help with:

  • Calculating how much you can borrow. Using the most up-to-date salary multiple calculations, a mortgage broker will be able to work out whether you can borrow the amount you need, based on your own income.
  • Finding the right lender offering the best rates. Your broker can save you a lot of time and, potentially, some money too by identifying the mortgage lenders currently offering the most competitive interest rates available across the market.
  • Downloading and optimising your credit reports. Before you apply it’s important to check your credit history to make sure no bad credit issues exist and remove any inaccurate or outdated information that could hinder your chances of securing the mortgage you need.
  • Preparing your paperwork. Your broker will be able to point out all the relevant documentary evidence required for your mortgage application – proof of income, address and ID, copies of bank statements etc. – so your mortgage application is as strong as it can be before you submit it.

Example monthly repayments for a £120,000 mortgage

Take a look at our repayment table below to see at a glance how the cost of a £120,000 mortgage can vary based on different rates and term lengths.

Term 2% 3% 4% 5%
10 years £1,104 £1,159 £1,215 £1,273
15 years £772 £829 £888 £949
20 years £607 £666 £727 £792
25 years £509 £569 £633 £702
30 years £444 £506 £573 £644

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% and the average mortgage rates between 5%-6%, the repayment figures for these rows in the table would be the most realistic at present. However, as the base rate comes back down in the future, mortgage lenders should follow suit and reduce their rates too.

Get an expert to confirm the lowest repayments available to you today

Factors that can affect your repayments

Here are some of the key criteria that could have an impact – both directly and indirectly – on your mortgage repayments:

Interest rates

The rate you secure will influence the monthly cost. Everything else being the same, a higher interest rate will mean you pay more for a £120k mortgage monthly. The rates available on the market can vary. So, it’s crucial to deal with a lender who’ll offer the most competitive rate for your circumstances.

Fixed or Tracker

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.

Term Length

How long you take out a mortgage for can affect your rates and directly impact your monthly cost for a £120k loan. A longer term will likely reduce your monthly repayments, but it usually means paying more over the life of the mortgage.

Your age

Although it’s possible to get a mortgage at almost any age, time on your side can lead to better deals from lenders. This could mean lower rates and monthly repayments for your £120,000 mortgage.

The role your credit score plays

It’s worth downloading all your credit reports before applying for a mortgage because these scores can make a difference to the number of lenders willing to consider your application and, therefore, indirectly affect the rates you’ll be offered. Your broker can help with any mistakes and show you areas to improve. If you do have bad credit, there will still be specialist lenders available.

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Other mortgage costs to consider

There are a few other additional charges to think about that may impact the monthly costs when setting up a mortgage worth £120,000:

Product fees

Some mortgages come with fees to set them up. These fees can include a booking fee, an arrangement fee, and a valuation fee. If you choose to include these mortgage fees in your total loan, it means you won’t have to pay anything upfront. However, keep in mind that including them will increase the amount you pay each month.

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

Stamp duty

Depending on the home’s value and whether it’s your main residence, you might be required to pay stamp duty. First-time buyers or those purchasing residential properties under £250,000 are exempt from this tax.

Legal fees

These costs typically arise during the purchase process. While they don’t directly impact monthly payments, they are an additional expense to consider in your calculations.

Why use Online Mortgage Advisor?

We offer a free broker matching service that pairs you with the mortgage broker in our network who has the most experience in achieving the goal you’re aiming for, whether this is minimising the monthly repayments, maximising your borrowing or you have complex personal circumstances.

All of the brokers that we work with offer a free initial consultation, and work on a success-only payment structure, meaning they will only charge a fee if they’re able to secure you a mortgage. Simply call us today on 0808 189 2301 or make an enquiry, and let us find the right broker to help you.

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!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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