If you’re looking to borrow £400,000 mortgage, it’s a good idea to learn about what this entails and when it’s an option. For example, have you calculated your maximum borrowing or looked up the cost of repayments on a £400,000 mortgage to see if it’s sustainable for you? Are you aware of how much you’ll need in deposit? Have you searched what £400,000 mortgage are currently on the market?

Don’t worry if you haven’t done all of this yet. We’re here to explain it to you. Of course, we’ll answer all of your questions when you call us. We also run through everything you need to know about getting a £400,000 mortgage when buying a new home, your first home or remortgaging your existing property in this guide. So keep reading to find out about repayments, deposit requirements, eligibility requirements and more on a £400,000 mortgage.

What Is a £400,000 Mortgage?

A £400,000 mortgage is a secured loan used to buy or refinance a property, where the amount borrowed from a lender is £400,000. The mortgage is secured against the property and must be repaid over a set period of time, usually 25 - 30 years.

In the UK, most lenders will typically require a house mortgage deposit of at least 5% - 10% of the property's value. So if you wanted a £400,000 mortgage to purchase a property for £422,000, you would need to provide at least £21,000 in deposit (5%).

Now, if you can provide more in deposit for a £400,000 mortgage – say 15% - 20% of the property’s purchase price - you can lower your LTV (loan-to-value) which can improve the interest rates offered by lenders.

Want to know what £400,000 mortgage deals are available on the market right now? Compare mortgage rates with our free best buys tool.

Who Can Get a £400,000 Mortgage?

To get a £400,000 mortgage in the UK, you must meet the lender’s affordability criteria and eligibility requirements. This means you must earn enough money, be able to afford the repayments, have enough in deposit and be an overall suitable borrower.

Your mortgage broker will work with you and provide advice before you even go about securing a DIP (Decision in Principle) from the lender. We’ll be able to let you know if you’re eligible for a £400,000 mortgage, as well as what monthly payments and term will be suitable for your needs. Once we’ve established that you’re eligible, we’ll approach the lender that will be able to offer you the best deal.

Here's some basic criteria you need to meet in general in order to be able to potentially get a £400,000 mortgage.

Your Maximum Borrowing Must Be at Least £400,000

When assessing what you can afford on a mortgage, the lender will calculate your maximum borrowing. They do this by multiplying your annual income by an income multiple. A common income multiple used by lenders is 4.5.

Here’s an example:

  • You earn £50,000 per year
  • Your partner, with whom you intend to take out the mortgage, earns £40,000 per year
  • Together, your joint income is £90,000
  • The lender works out your maximum borrowing using their income multiple of 4.5
  • £90,000 x 4.5 = £405,000
  • Your maximum borrowing – i.e. the largest amount the lender is able to loan to you (if you meet the rest of their criteria) – is £405,000

Essentially, if the joint income of all applicants multiplied by 4.5 is at least £400,000, then you may be eligible for a £400,000 mortgage if you meet the rest of the lender’s criteria.

You Must Be Able to Afford the Monthly Repayments on a £400,000 Mortgage

Once the lender has provided your maximum borrowing they will need to work out what you can afford to repay.

The lender will consider your monthly income and outgoings to assess what you can afford to make in capital and interest payments each month. They will give indication of the minimum and maximum terms based on what they feel is affordable for you.

The lender then looks at all of this information, as well as some additional factors mentioned below, to determine the mortgage deal they’re prepared to offer you.

Our mortgage affordability guide and borrowing calculator can help you assess your situation. You can also try our mortgage repayment calculator to work out your potential repayments.

You Must Meet the Lender’s Other Eligibility Requirements

Here are some other requirements the lender will have that you must meet in order for them to consider you for a mortgage. Some common UK lender requirements include:

  • You must be a UK resident who is a citizen or has the right to reside in the UK
  • You must have a stable income – whether you’re employed or self-employed
  • Good credit history - borrowers with a good credit history are more likely to be approved for a mortgage and may get better loan terms. It is possible to get a mortgage with bad credit but you will have to use an adverse credit lender and will face high interest rates
  • Deposit – to be eligible for any home mortgage you will typically have to provide a deposit of at least 5% - 10% of the property purchase price

How Much Does a £400,000 Mortgage Cost?

The cost of a £400,000 mortgage in the UK will depend on several factors, including:

  • Deposit - most lenders require a minimum deposit of 5% - 10% of the property's value, so for a £400,000 mortgage, the deposit could range from £20,000 to £40,000
  • Interest rate - the interest rate will affect the monthly payments and the total cost of the mortgage. A lower interest rate can result in lower monthly payments, but a higher interest rate can increase the total cost of the mortgage over the loan term as you’ll pay back more in interest. Having an excellent credit history and providing a larger deposit can give you access to lower interest rates
  • Loan term - the loan term can affect the monthly payments as well as the total cost of the mortgage. For example, the longer the term over which you pay back the mortgage, the lower your monthly payments will be, but the longer the period over which you pay interest and therefore the more interest you’ll pay

In addition to the above factors that can impact the cost of the mortgage itself, here are some additional costs and fees you should be aware of:

  • Stamp Duty
  • Valuation fee as well as the cost of any additional surveys
  • Conveyancing fees
  • Broker fee
  • Lender arrangement fee
  • Insurance

What Are the Typical Repayments on a £400,000 Mortgage?

The typical repayments on a £400,000 mortgage in the UK depend on the interest rate and mortgage term.

For example, if you took out a £400,000 mortgage with a 5% fixed interest rate, set over a 25 year term, the monthly payments would be approximately £2,339. This figure will likely differ based on your individual circumstances.

Bear in mind that your fixed rate wouldn’t last the full mortgage term but a set number of years – e.g. 3 or 5. After this you would go onto your lender’s SVR (standard variable rate) which would be more expensive. Fortunately, you don’t have to go onto your lender’s SVR but can instead remortgage onto a new deal when you’re approaching the end of your fixed rate.

To work out your potential monthly payments on a £400,000 mortgage – i.e. the capital and interest payment you’ll make to the lender each month – try our mortgage payment calculator.

What Salary Do I Need to Get a £400,000 Mortgage?

The salary you need to get a £400,000 mortgage in the UK – or at least be eligible for - will depend on the lender’s income multiple. If the lender uses a standard income multiple of 4.5 when assessing your application, then your salary – combined with the income of any joint applicants, will need to be at least £89,000. An income of £89,000 x 4.5 would give you a maximum borrowing of £400,500. This means you could potentially borrow up to this amount if you could afford the monthly payments, had enough in deposit and met the rest of the lender’s criteria.

Find out how much you can borrow and if you could potentially borrow up to £400,000 with our mortgage calculator.

Bear in mind that each lender will have their own affordability calculations, including income multiples. This means that what one lender can offer you will probably be slightly different from another. It also means that just because one lender won’t loan you a £400,000 mortgage, it doesn’t mean another one won’t if you meet their criteria. To get an accurate estimate of your eligibility and the lenders that can consider your application, speak with one of our mortgage advisers on 0330 433 2927.

How Can You Improve Your Chances of Getting Approved for a £400,000 Mortgage?

If you’re eligible for a £400,000 mortgage and want to improve your chances of having your application accepted, there are a few steps you can take:

  • Use a mortgage broker
  • Improve your credit score
  • Reduce your outgoings and pay off debts
  • Provide a larger deposit
  • Gather all necessary documentation
  • Be honest and transparent

The more reliable you look as a borrower to the lender, the higher your chances of getting approved for a £400,000 mortgage.

How to Reduce Payments on a £400,000 Mortgage

Here are some ways you can reduce monthly payments on a £400,000 mortgage.

  • Opt for a longer term - by choosing a longer mortgage term, you can reduce the monthly repayments, although you may pay more in interest overall
  • Consider an interest-only mortgage - an interest-only mortgage allows you to pay only the interest each month rather than interest and capital. This can greatly reduce your monthly payments however, bear in mind that the lender will need to know how you intend to pay back the capital at the end of the mortgage term
  • Make overpayments - most mortgage providers allow you to make overpayments on your mortgage without penalty. This will reduce the amount of interest you pay and help you repay the mortgage sooner
  • Secure a lower interest rate – the easiest way to ensure you’re getting the cheapest rate available to you is by using a mortgage broker like John Charcol. We’ll be able to find you the best lender with the right deal for your situation. You should also consider improving your credit score and saving more in deposit if you want to access better rates

What Would the Interest-Only Payments Be on a £400,000 Mortgage?

The interest-only payments on a £400,000 mortgage would depend on several factors, including the interest rate, loan term and lender. Interest-only payments are based on the interest rate charged by the lender and the loan amount. The interest rate can be fixed, variable, or a combination.

For example, if the interest rate is 5% on a £400,000 mortgage, the interest-only payments would be about £20,000 per year or £1,668 per month. It's important to note that with an interest-only mortgage, the borrower only pays the interest on the loan each month and does not reduce the loan balance like they would with a repayment mortgage.

The outstanding loan balance must be repaid at the end of the loan term, via a suitable repayment vehicle such as selling the property. This type of mortgage may be suitable for borrowers who plan to sell the property and downsize. Borrowers should carefully consider their financial situation and plans when choosing a mortgage and discuss their options with a mortgage broker such as John Charcol.

How Can a Mortgage Broker Help You Secure a £400,000 Mortgage?

A mortgage broker such as John Charcol can help you secure a £400,000 mortgage by learning about your situation and finding the right deal for your circumstances. We’re a team of experts who know which lenders could consider your application, what criteria they have and what your options are.

We guide you through the entire property-buying journey, package and submit your application, liaise with lenders and more. We can even help you arrange insurance for your property and moving services.

Contact us today on 0330 433 2927 to find out more.

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