![]() ![]() If you have any marks on your credit history, your lender may charge you a higher interest rate to counterbalance the risk of lending to you. If a lender agrees to lend to you, they may end up charging you a higher interest rate to balance out the risk. If you’re in what’s deemed ‘non-standard’ employment – for example you’re self-employed with complex income, you work part-time or you’re a contractor with limited proof of earnings – you’ll be considered higher risk because of your potentially irregular income. This could mean securing a lower interest rate and having a wider range of lenders and deals to choose from. If you’re in a full-time, employed job, lenders will typically deem you a low risk borrower as they’ll be reassured you’ll be able to afford your monthly repayments. Remember, although an interest-only mortgage means lower monthly repayments, you still have to pay back the full loan in the end so you’ll need a viable repayment plan in place, approved by your lender. You then repay the full amount borrowed as a lump sum at the end of your mortgage term. With an interest-only mortgage, you only pay back the interest charged on your loan each month, unless you choose to make optional capital payments. With a repayment mortgage, you pay back some of the interest and some of the initial loan. The type of mortgage you opt for will have a huge bearing on your monthly costs. In addition to rate and term length, several other factors will impact how much your mortgage will cost each month. What other factors affect how much you pay? The size of your deposit will also determine the rate you pay, so the more you can put down the better. Most lenders will offer a maximum loan-to-value (LTV) of 90%, which means you’ll need to put down at least 10% of the property price. What size deposit do you need?įor a property worth £400,000 you would usually need a deposit of at least £40,000, although some lenders will accept £20,000 under the right circumstances.Īs with all mortgages, the bigger your deposit, the more likely you are to be accepted. Get in touch today and we’ll match you with a broker who specialises in larger-than-average loans from our extensive network. They also get access to exclusive deals, can give you tailored advice and be on hand throughout the deal to make sure any issues are dealt with swiftly. A broker who specialises in larger-than-average loans will be able to identify the right lender for you and negotiate a deal on your behalf, saving you time and money. ![]() ![]() Taking out a mortgage of this size is a big financial commitment and you’ll want to make sure you’re paying the best possible rate and signing up to the right product for your circumstances. For a £400,000 loan, however, a broker is highly recommended. Whatever size mortgage you need, it’s always a good idea to seek advice from a whole of market broker who can help you find the best deal and guide you through the application process. How a broker can help you get approved for a larger mortgage Try our mortgage affordability calculator below to work out whether you will qualify for a mortgage of this amount based on typical income multiples. The table below shows how much you can borrow based on various different salaries and income multiples: Income Most lenders will let you borrow between 4 and 5 times your annual salary, so based on these income multiples, for a £400k mortgage, you’ll need to earn between £80,000 and £100,000. ![]() The below calculations are based on a £400,000 mortgage with an interest rate of 3.5%. The below calculations are based on a £400,000 mortgage with an interest rate of 3%. The below calculations are based on a £400,000 mortgage with an interest rate of 2.5%. All tables in this article were created purely for example purposes – you should speak to a broker for bespoke calculations. The tables below show how different interest rates and term lengths can impact how much you pay for your mortgage overall. While a longer term will make monthly repayments more affordable because you’re spreading the cost of the mortgage out over more years, in the long term, you’ll end up paying more because you’ll be paying interest over a longer period of time. The average mortgage term in the UK is 25 years but a large number of lenders now offer 30 and 35-year mortgages, and some have stretched their maximum term to 40 years. The rate you pay will depend on various factors including your income, credit history, employment status and the type of property you’re purchasing. At the time of writing, average rates are between 2.5% and 3.5%. The higher the rate, the more you’ll end up paying. ![]()
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