In this article, we’ll have a look at the factors that can affect how much your repayments are for a £120,000 mortgage, some example calculations, and how to secure the lowest repayments possible.
Before you read on, use our calculator below to get an idea of what your mortgage repayments will be. Simply enter ‘120000’ into the tool along with a term length and interest rate to get some quick results.
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.
Total amount paid at end of term:
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How much will your £120,000 mortgage cost per month?
To give an example based on current average interest rates (October 2023) and term lengths, a £120,000 mortgage with a 30-year term and a 5.5% interest rate would cost £681 per month.
However, your exact monthly repayments can vary quite considerably, depending on both your personal circumstances and the mortgage-related factors outlined below:
The higher your interest rate is, the more expensive your monthly payments will be.
It’s possible to maintain the lowest rates possible by remortgaging as soon as your existing deal comes to an end, as this will prevent you from slipping onto your lender’s SVR (standard variable rate) of interest, which is typically much higher.
The longer your mortgage term, the lower your repayments will be. However, a shorter term means you’ll pay less interest overall. The key is to select a term with a repayment you feel comfortable with from a financial perspective without over stretching.
There are a range of mortgage types available but, in reality, the main option for most people is a choice between a fixed-rate mortgage or a tracker mortgage.
A fixed-rate will give you the guarantee of knowing what your repayments will be each month. A tracker rate will vary in line with the Bank of England base rate, so if the base rate comes down then your repayments will also reduce.
You could also consider the repayment method. An interest-only mortgage dramatically reduces the cost of monthly repayments, regardless of the size of the interest rate. However, you would need a separate repayment vehicle to repay the capital amount in full at the end of the term.
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The table below shows how the repayments on a £120,000 mortgage can vary based on different interest rates and term lengths.
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).
Other factors that could affect your repayments
In addition to those already mentioned, there are some other factors that can indirectly affect your mortgage repayments. For example:
- Your age. Most lenders have maximum age limits on their lending, so your age can have a significant impact on the length of term you’re able to qualify for. For example, if the lender’s age limit is 75 years, a 30-year-old could potentially qualify for a term of 35 or even 40 years, whereas for a 55-year-old, 15-20 years is likely to be the longest term possible. If you’re an older borrower, the good news is that there are some lenders who don’t use a maximum age limit, as well as specialist lending products designed for those over the age of 55.
- Credit score. The most competitive interest rates are often reserved for those with a strong credit score. With a history of adverse credit, it may still be possible to get a bad credit mortgage, but interest rates are typically higher.
- Deposit. The amount of deposit you provide also has the potential to influence your monthly payments, as lenders tend to offer better interest rates, the lower the loan-to-value (LTV) of your borrowing.
- Income type. Your employment status can have an indirect effect by reducing the number of lenders willing to consider your application if you’ve only recently become self-employed or work on a contractor basis, for example.
- Property type. If you’re looking to buy a non-standard construction property, such as one with a thatched roof, or made out of a specific material, this will possibly mean having to find a specialist lender for your mortgage.
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How a mortgage broker can help
Once you’ve found a property and made some calculations, your next step 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.
Other costs to factor in
Whilst our calculator provides you with a good idea of how much your monthly repayments will cost on a £120,000 mortgage, it’s important to understand that this won’t be your only outgoing when it comes to buying a property. There are a range of additional costs associated with both taking out a mortgage, and home ownership, as explained below.
Most costs related to taking out a mortgage tend to be one-off expenses, such as:
- Deposit: typically between 5-25% of the loan, depending on the type of mortgage you need
- Arrangement fees: although not all lenders charge this, it can be as much as 2% of the loan amount
- Broker fees: usually a percentage of the loan amount (up to 1%), some brokers may charge a fixed fee (between £500-£1,000). Bear in mind that using a broker can help you save money in the long run by securing you a cheaper mortgage.
- Solicitor fees: for all legal aspects of your application and searches/conveyancing
The ongoing costs of home ownership and having a mortgage include:
- Buildings and contents insurance – contents insurance is optional but recommended, building insurance is usually essential to your mortgage deal
- Mortgage protection – is recommended to help you maintain your mortgage repayments in the event of sickness, unemployment or death, depending on the type of policy. Some lenders may impose this as a requirement for higher risk applicants
- Household bills such as utilities and council tax
- Maintenance costs, such as structural repairs or redecorating
- Ground rent – this is only a factor if the property you’re buying is leasehold
Get matched with the right mortgage broker
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.