Before taking out a mortgage, it’s advisable to find out how much it will cost you to pay back monthly.
Mortgage repayment will probably be your most significant outgoing expense every month, and it’s vital to know whether you can afford it now and in the future.
In this guide, we’ll break down how much a £150 000 mortgage could cost you per month, the factors that influence monthly costs, and how you can get the best rates available.
Monthly Repayments For A £150 000 Mortgage
How much you pay every month for a £150000 mortgage will depend on various factors.
The most important ones are the length or term of the mortgage and the interest rate you’re given.
Keep in mind that every lender is different, and they’ll have their criteria to determine the rates they give you.
Factors like your profile or credit history and your level of deposit can influence the interest rate a lender is willing to offer.
Interest Rates For A £150,000 Mortgage
The interest rate affects the monthly repayments on any loan, and you typically you may get a rate ranging between 1% to 5% for a £150000 mortgage in the UK based on current rates.
The interest is usually added to a portion of the capital or amount borrowed and paid back each month for the loan duration.
Here’s an illustration of how the monthly repayments can differ on a £150000 mortgage with a 30-year term based on different interest rates:
- Interest Rate 1% 2% 3% 4% 5%
- Monthly Repayment £482 £554 £632 £716 £805
Interest Only Repayments
You may also get the option to repay only the interest every month for a £150000 mortgage. In such an agreement, the total amount of capital borrowed becomes due at the end of the term, and you only repay the interest each month.
However, to qualify for an interest-only £150000 mortgage, you must show the lender evidence of a viable repayment strategy. This is because you risk piling up a huge debt that can be difficult to repay without a good plan.
The repayment strategy assures the lender that you can cover the entire balance at the end of the mortgage term.
You’ll also need a larger deposit to qualify. With an interest-only mortgage, you’ll have lower monthly costs since you’re not paying anything off the capital amount.
The Term For A £150 000 Mortgage
Typically you may get a term of between 5 to 30 years to repay a £150000 mortgage depending upon your circumstances. The term will have a massive effect on your monthly repayments as well as the total amount you’ll ultimately pay.
With a more extended period, you’ll have cheaper monthly payments. However, the total amount you’ll repay for the loan will be higher than a shorter period. You can save thousands by repaying your loan over a shorter period.
To give you an idea of how the term affects monthly and total payments of a £150 000 mortgage, check out the table below, which is based on a 3% interest rate.
Term Monthly Repayment Interest Total Repaid
- 30 years £632 £77,621 £227,621
- 25 years £711 £63,358 £213,358
- 20 years £832 £49,627 £199,627
- 15 years £1,036 £36,437 £186,437
- 10 years £1,448 £23,796 £173,796
- 5 years £2,695 £11,712 £161,712
The less the loan term, the less the total amount you’ll pay, but the higher the monthly payments. Keep in mind that the period you get will depend on your circumstances, and it’s wise to base your decision on the amount you can realistically afford each month.
Deposit Amount Affects How Much You Pay Monthly
The deposit you’ll need for a £150000 mortgage will depend on the lender’s loan to value (LTV) ratio. It describes how much a lender is willing to offer you compared to the value of the property you’re buying and is expressed as a percentage.
For example, with a £15000 deposit, you’ll own 10% on a property worth £150 000 and borrow 90%. This makes the LTV ratios 90%.
With a low deposit, you’ll be seen as a riskier borrower, which may translate to higher interest rates from lenders. Lenders in the UK can offer you a mortgage of up to 95% of the property value depending upon lender criteria.
The higher the deposit, the lower the interest and loan amount you have to repay monthly and in total.
Bad Credit Effects On A £150 000 mortgage
There are bad credit £150 000 mortgages available in the UK, but lenders may require a higher deposit and charge you higher interest rates to offset the risk. This will ultimately translate to higher payments every month.
It’s important to remember that every lender is different, and each borrower is treated as an individual on a case-by-case basis. Each may offer different rates and ask for different deposit sizes for a bad credit £150 000 mortgages.
You can still get reasonable rates and LTV ratios depending on the severity and recency of your bad credit issue. Lenders will favour borrowers with older credit issues compared to those with more recent misdemeanours. Consulting a mortgage adviser can help you get the best rates for your circumstances.
For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:
Monthly Payments For A £150 000 Buy to Let Mortgage
Your monthly payments and deposit will be different depending on whether you’re eyeing a residential or buy to let mortgage. Many buy-to-let mortgage providers require a 25% deposit, and others can ask for 15% provided you meet their criteria.
The monthly payments may be lower because most buy to let mortgages are on an interest-only repayment basis. Also, unlike residential interest-only agreements, you don’t require a viable repayment strategy in buy to let mortgages.
Lenders gladly accept the sale of the property at the end of the period to cover the amount with a buy to let.
Other Fees That May influence How Much You Pay
In addition to the interest and capital percentage, other fees may influence how much you pay each month i.e. broker fees, lender fees, buildings insurance.
How Much Is A £150000 Mortgage A Month? Final Thoughts
When considering what mortgage amount to apply for ask an expert to assist you. Affording the repayments each month comfortably should be a number one priority.
If you’re ready to take the leap, we’re ready to help you with your first time buyer mortgage application.
As a first time buyer, it’s natural to have a lot of questions. Ask away, one of our friendly advisors would love to talk things through with you.
Call us today on 01925 906 210 or complete our quick and easy First Time Buyer Mortgage Application.