Mortgage Repayments on 150k: How Much Will It Cost You?

How much will mortgage repayments on 150k cost you every month?

What factors influence your monthly loan repayments, and how can you minimise costs?

Our guide will reveal all.

How Much Does a £150,000 Mortgage Cost per Month?

If you get a £150,000 mortgage, repayments will cost about £692 per month, provided your loan term is 25 years, and you get a 2.75% interest rate.

In reality, though, there are several factors that impact how much you will end up repaying for a £150k home loan. 

Which Factors Impact Monthly Repayments on a 150k Mortgage?

1. The length of the mortgage term

Overall, longer terms come with lower monthly repayments and give you more flexibility when it comes to paying off your loan. However, you will be required to pay higher rates than the standard mortgage rate in the UK.  

Here is a practical example: Say you took a £150 000 mortgage over 10 years. You would pay roughly £1,380 a month. If you have a £150 000 mortgage over 30 years, you would pay about £497 a month, but interest rates will be 4.47% or higher. 

2. Interest rates

When making repayments on a 150k mortgage, you can choose between a fixed or a variable interest rate. 

With fixed interest, you will have to pay a higher monthly rate in comparison to variable interest, but at least you know that the rate will not change throughout the loan term. 

Let’s take a look at the difference between fixed and variable interest rates when it comes to making 150 000 mortgage repayments. 

• Fixed: A 25-year loan term on your mortgage with a fixed 4% interest rate would cost £792 per month, whereas a 15-year term with the same fixed rate will end up costing £1,109.53 monthly.
• Variable: A variable rate of 1.77% for 2 years means you will repay £619 a month. After the rate varies to about 5.25%, you’ll need to pay £876 a month for the remaining 23 years. 

3. Mortgage Type

In general, there are two types of mortgages: capital repayment and interest-only mortgages (or a combo of both).

Interest-only mortgages are less expensive as you only repay the interest each month—a 150 000 mortgage over 10 years will cost you £500 a month if it is interest-only, while monthly repayments on a capital repayment mortgage come out to £1,519 over the same term. 

Keep in mind that at the end of the term, you will have to pay the entire amount borrowed so that capital repayment mortgages might be less costly in the long run. 

4. Loan to Value Ratio

The LTV ratio measures the amount of your mortgage in relation to the value of the property.

The lender’s LTV ratio will determine the amount of deposit you need to put down. Most lenders in the UK will go as high as a 95% LTV, which means you need to provide at least a 5% deposit. 

However, bigger deposits significantly boost your chances of getting better mortgage interest rates and terms, so you should try and raise as much as you can as a downpayment. Opt for a joint mortgage or see if your family can gift you the extra funds needed to supplement your deposit. 

5. Type of property 

Certain property types are considered riskier than others, so if you buy a house that is not a standard construction or a second home, you are likely to be offered less competitive rates and get higher monthly payments on a 150k mortgage. 

Buy-to-let mortgages are also seen as riskier than residential ones because there’s no guarantee that the property will be occupied or that the tenant will make payments when they are due. On top of this, most landlords choose an interest-only mortgage which puts the lender at more risk if the borrower fails to repay the capital at the end of the term. 

6. Age

Most high-street lenders will ask you to finalise repayment on a £150k mortgage by the time you are 75 or 85 years of age, so if you are over 60 or 65, you will be offered a shorter loan term and thus higher monthly payments. 

That said, there are lenders who do not impose age limits and are willing to work with older borrowers—it is just a matter of finding the right one. 

7. Credit Rating 

Applicants who have good credit scores are offered more competitive interest rates. Those with poor or bad credit ratings would benefit from speaking to lenders that specialise in bad credit mortgages. 

Keep in mind that even specialist lenders have certain criteria to determine whether you’re eligible or not, such as how recent the credit issue was, how much you owed and whether you have paid it off or not.

Also, note that most lenders, specialist or otherwise, are not likely to lend money to people with a CCJ or IVA on their credit file or those involved in bankruptcy procedures. 

8. Income 

PAYE earners get better rates as lenders consider a steady paycheck as a stable source of income. That is not to say that self-employed freelancers or casual workers cannot get approved for a home loan. 

In fact, lenders tend to look at your overall affordability, which is why it is possible to get a mortgage even if you are a low-income earner without a steady job, provided you are able to pay back the loan. 

How to Calculate Monthly Repayments on a £150k Mortgage in the UK

The quickest and easiest way to calculate the monthly repayments on a 150k mortgage in the UK is to use an online mortgage calculator. Simply put in the value of the home you wish to buy and choose the parameters (type of interest and mortgage) to find out how much you will need to pay every month. 

However, if you are still facing issues, you can speak with an experienced mortgage broker who can help you get the best deal possible. A mortgage broker will also advise you on which product is best for your financial situation so you will not have to get into debt by taking out a £150,000 mortgage. 

Note: Besides interest, mortgages come with other fees like broker and legal fees, arrangement fees and buildings insurance on top of your monthly payments on a 150k mortgage. If you are struggling to make repayments, look into an offset mortgage or a flexible mortgage. 

Final Thoughts 

A £150k mortgage can help you get the house you’ve always dreamed of. But before you apply for a loan, bear in mind that buying a home requires careful planning and budgeting. Consider all the factors that will affect your monthly mortgage repayments and compare them to your household budget to see whether you can afford the loan. 

Remember, 7% of British households are having issues repaying their debts, so don’t be one of them.