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£200,000 Mortgage Repayment Example

Author: Myles Robinson - Expert Finance Advisor

Posted: Jun 6, 2022

£200,000 mortgage repayments example

This article will explain everything you need to know about a 200k mortgage and mortgage repayments.

It will also give you an idea of how many monthly repayments might cost and what kind of deposit you need for a 200,000 mortgage.

Take a look at the mortgage repayment calculator to get an idea of the cost of a 200k mortgage.

Talk to one of our expert mortgage brokers, you can save time and find the best mortgage deal for you.

Our mortgage brokers will answer all your questions about mortgages and help you find the best deals through their access to the whole market.

 

What factors could impact the payments on a £200,000 mortgage loan?

Of course, the answer is different for everyone.

This is why it is so important to get bespoke advice from a mortgage broker.

First, every lender is unique, as are every borrower’s credit history, and other circumstances. These factors can have an impact on your monthly payments.

The term of your mortgage and the interest rate offered by the lender will both impact the amount of the repayments.

This table illustrates (approximately), how monthly repayments may vary depending on the term and interest rate.

This is a comparison only. You should consult your broker or lender for the most current information.

You may be wondering what interest rate might you be eligible for. It all comes down to the amount of your deposit and your risk profile (largely based upon your credit history).

Get in touch to get a better idea of the rate you could get on a 200k mortgage deal. We’ll match you up with an expert advisor who will go over the numbers.

What income is required to be eligible for a £200k loan?

It can be more than the number on your wages slip. To give you an idea, lenders limit the amount you can borrow on the basis of x4.5 of your income. Others go up to x5 while others go up to x6. However, this is only if the circumstances are right.

To give an approximate figure, let’s say that two applicants are applying for the same job. They would each need a salary between £33,000 to £50,000.

However, this doesn’t include any other factors lenders consider when assessing affordability such as your credit rating and how much you deposit.

 

What amount of deposit would you need to get a 200k mortgage loan?

Your credit score, your employment type, whether you are looking for a residential or buy to let mortgage, and the loan-to-value (LTV) ratio of the lender will all affect the size of your deposit.

The ratio of property value to mortgage is called loan-to-value. It is expressed in percentages. To get a mortgage on a 200,000 property, you will need to deposit £20,000 (10%) if the lender has a maximum LTV ratio of 90%. That 10% would be yours.

A higher rate is usually possible if you have a larger deposit. Mortgage lenders will consider you a lower risk. A mortgage lender might require that you deposit a higher amount if you have poor credit, are self-employed, or are looking to buy-to-let properties.

What does the term of the mortgage have to do with the amount and repayments?

It all comes down to your monthly budget and how long it will take to pay off a £200,000 loan.

Based on an interest rate of 3%) the table below shows how reducing your term can impact your monthly repayments as well as the total amount that you will pay over the term.

This example is only for demonstration purposes. You should speak to your broker or lender for current rates and information.

The length of your mortgage will have a significant impact on the final amount you pay. For example, a £200000 mortgage for 25 years can cost you thousands more than one for 20 years. However, you might find that the monthly payments are cheaper.

Our experts can help you decide which term is best for your situation. Send us an enquiry to learn more about the best mortgage deal on the market.

How much deposit do I need to get a 200k mortgage?

Lenders will view you as a higher-risk borrower if you have a history of poor credit. A history of bad credit can make you riskier, leading to higher deposits and lower rates.

Every lender will treat every issue differently, and each lender is unique. Each lender will have different rates and request different deposits for a mortgage with bad credit.

Lenders generally consider some issues to be lower risk. Some lenders might be willing to give you a better rate and a higher loan ratio (LTV) if you have a low score.

However, if you have a more serious situation, like a recent bankruptcy or repossession they will ask for a higher deposit or a higher rate of interest.

Others providers take a case-by-case approach to lending. To allow the lender to complete a full assessment of your case, you may need to provide a written description. Your application might also require an additional underwriting review.

Check out our table to see how credit scores can affect your mortgage.

Can you get a £200,000 buy-to-let mortgage?

It is very possible. It is worth noting that BTL mortgages have different rules and are often more stringent.

Lenders will often require a higher deposit. However, it is not unusual for lenders to accept 25%, if you meet other criteria.

Another common factor is the requirement for a minimum income. Some lenders require that you earn at least £25k per year.

However, lenders may look at your rental income forecasts and insist that your monthly £200,000 mortgage payments are covered 125%-130%.

Another problem is that most of them won’t offer a TTL mortgage to first-time buyers. You need to own your house first. However, some specialist providers might consider it (if you meet a few other criteria).

Many people choose to take their mortgage buy-to-let on an interest-only basis. Below is a breakdown of monthly payments for a £200k interest-only mortgage.

Is it possible to get an interest-only £200k loan?

There are many options on the market. However, lenders will need to see a viable repayment strategy before they give you the money.

A repayment strategy is basically a written plan that outlines how you will be able to pay the entire mortgage balance at the end.

An interest-only mortgage is a mortgage that only pays the interest. Capital due at the end will be paid in one lump sum.

There are different criteria to apply for an interest-only residential mortgage. A larger deposit will likely be required. Lenders will typically only offer 75% loan to value (LTV), but a few will offer 80% and a few will even offer 85%, depending on the situation.

What is the monthly interest rate on a £200,000 mortgage loan?

Here’s a comparison of a repayment mortgage and an interest-only mortgage. This is based on monthly payments over a 25-year term.

The lower column shows how much monthly interest you would have to pay on a £200k loan at different interest rates.

What other factors could impact the mortgage application?

Lenders will consider a variety of factors when considering your application for a mortgage. Below are some examples.

Your age

It is not unusual for lenders to limit loans to those over 75. Lenders won’t lend money to people over 75. Some limit the loan amount to 85. Others don’t care how old you might be, as long as you can prove that you will be able to pay the monthly payments in retirement.

Your expenses

The government’s MMR (Mortgage Market Review) has made it mandatory to examine your expenditures as well as your income. This means that having a lot of outgoings may decrease your chances of getting approved (even gym memberships can play a role).

You choose the type of property that you wish to purchase

Many lenders are cautious about what are called properties of non-standard construction. These include houses with thatched roofs and timber frames. While some will not lend to such an unusual property, others may request more stringent terms, such as higher interest rates and deposits.

Your income source(s)

Lenders love people who work full-time on large, PAYE wages. Lenders tend to view everything else as ‘nonstandard’ and offer lower rates.

There are specialist lenders who will approve mortgages for all income levels, even those who are self-employed or who wish to apply for a mortgage with commissions or bonuses. You can also get benefits from your mortgage lender.

Credit rating

Your credit score is an important factor. Your credit rating will determine how much you get offered deals. The most important factors are generally the severity of the problem and how long it has been since it happened.

A default payment made 5 years ago, for example, will have a smaller effect than bankruptcy last year.

 

£200,000 Mortgages for the Self-employed

Although being self-employed does not make it impossible to own a home, you might need to find a specialist lender in order to get the best rates for a £200,000 mortgage. Self-employed applicants are often considered ‘nonstandard’ by conventional lenders, which can lead to higher risk.

You can find out more about the self-employed mortgages guide.

Can I get a secured loan of 200k?

Secured loans can be a viable option for borrowers looking to borrow a large amount of money without having to remortgage.

In some cases, a £200k loan secured against your home may be more convenient than a conventional mortgage. Because these loans are secured against your property, lenders consider them lower-risk.

Secured loan rates can be more competitive than conventional mortgages because they are often easier to arrange and don’t have any fees for early settlement. Non-standard income and adverse credit are less important factors. Some lenders will even let you borrow up to x10 of your income.

Where can I find a mortgage calculator?

When it comes to getting a mortgage, there are many variables. Your credit history, income sources and monthly expenses are just a few. Calculators can only provide a general overview of the options available.

Get expert advice to determine if you are eligible for a 200k mortgage or how much you might have to pay on a 200k mortgage.

Talk to one of our brokers to get the best advice tailored to your situation. They can help you sort through the confusion and find the right lender with the best mortgage deal.

Talk to an expert about your £200,000 mortgage requirements today

Are you unsure if a £200,000 is affordable? Or do you just want friendly, no-obligation advice?

Contact us here today for free mortgage advice with an expert broker.

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