What Monthly Repayments On £500K Mortgage Can I Expect?

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Mortgage lenders will need to be absolutely sure that you’re able to manage the monthly payment before agreeing to lend you money for a mortgage as large as £500,000. But perhaps more importantly, you will need to be absolutely sure too. If you fail to make your mortgage repayments, then you will damage your credit score and find yourself susceptible to fines from your lender should you fail to keep up with the payments agreed to in your mortgage loan contract.

That’s why it’s important to understand your likely monthly repayments before you even approach a mortgage lender looking for a £500,000 mortgage. Below, we’ll explore what factors affect your monthly mortgage payments and work through some examples to give you an idea about the sort of monthly payments you can expect to make.

*All figures marked with ~ throughout the article are accurate estimates, although final repayment amounts won’t always be the same if you apply for a similar deal due to changing interest rates and mortgage deals.

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Am I Likely To Be Approved For A £500,000 Mortgage?

A £500,000 mortgage is by no means the average in the UK, and because you’ll be borrowing such a large amount, a mortgage lender will almost certainly scrutinise your approximate annual income more closely than they might for a smaller mortgage. However, if you have the income to manage the monthly mortgage payment on such a large mortgage, then there’s no reason why you wouldn’t be approved.

You will, however, need to prove to your lender (and yourself) that you can definitely afford the monthly mortgage repayments based on two main factors:

  • Your spending habits
  • Your ability to repay should your circumstances change

Before any lender agrees to lend any amount of money for a mortgage, they’ll always look at your income and your outgoings over the past 3 months to ensure your spending habits are sensible and you have the required income to manage your monthly payments reliably when paying back your mortgage.

The second thing a lender has to consider before agreeing to any mortgage deals is their ‘financial stress test’. This is when a lender will consider your ability to make your mortgage repayments should your circumstances change. For example, if you were to have a child, or your dual income household dropped to a single income.

Whether you are approved for a £500,000 mortgage will largely depend on your mortgage lender’s opinion about whether or not you can. But you can get a good idea for yourself by reading the rest of our guide.

Which Factors Affect Mortgage Monthly Payments?

The main things directly impacting your mortgage payment each month will be your mortgage deal’s interest rate, length of mortgage, mortgage type, and the amount you can put down as a deposit.

Interest Rates

The interest rate deal you can get on your mortgage probably has the biggest impact on your monthly repayments. This is especially true if you happen to be on your lender’s standard variable rate mortgage or tracker mortgage.

Variable rate mortgages and tracker mortgages are mortgages that react to the interest rate set by the Bank of England in the UK. That means, as they rise or fall, so does the interest rate attached to this type of mortgage. This is an excellent option when interest rates are low, but when they rise it leaves borrowers at the mercy of higher monthly repayments. This will also affect those with larger mortgages far more compared to those who already make smaller payments because of a lower mortgage to begin with.

Others opt for fixed rate mortgages. Here, the interest rate you pay will be set for a specific period of time – usually 2, 3, 5, or 10 years – so you know exactly how much your mortgage will cost each month for the set period. After this time, you’ll automatically be placed on a variable rate mortgage again until you fix at a new rate if you decide to do so. The benefit here is that you know what you’ll pay, but it also means you could be locked into an interest rate that’s much higher than those on a variable rate mortgage depending on when you fixed and at what interest rate.

In short though, the higher your interest rate, the higher your monthly repayments will be for your mortgage.

Mortgage Term

Another huge influence on your payment each month is the length of the mortgage, or the mortgage term. The length of time you take your mortgage out over will determine how high or low your mortgage payments will be each month. Here’s an example of the monthly payments for a £500,000 mortgage taken out with a 5.5% interest rate over 15 vs 30 years:

  • 15 Years: ~£4085 (totalling £735,339 repaid)
  • 30 Years: ~£2839 (totalling £1,021,936 repaid)

The shorter repayment term does mean a higher monthly payment, but you’ll pay far less back in total through interest. The reverse is true for a longer repayment term, where you’ll pay less each month but end up paying far more with interest considered over the extra years.

The key to a good mortgage deal for you is to find a deal with a monthly mortgage payment you can comfortably afford, whilst also making sure you pay it back in a period that means you don’t overspend on the interest costs over the course of the loan agreement.

Mortgage Type

A repayment mortgage is one of two broad categories of mortgage type alongside interest only mortgages. A repayment mortgage means each month you cover the cost of your interest rate charges and actually repay the capital of the loan. Your capital is the amount you take your mortgage out for, so in this case, a £500,000 mortgage means your capital is £500,000.

Interest only is a type of mortgage that you won’t start out on, but you may be able to move to should your circumstances change and you need a break from your regular repayment mortgage. Lenders will allow you to switch to this mortgage type if you’re able to afford the interest payments on your mortgage but not the capital payments. As soon as you’re able to again, you will be switched back on to your usual mortgage to continue paying as normal.

Your monthly costs will be higher whilst on a repayment mortgage compared to interest only, but again, you’ll end up paying more back in interest overtime because of the additional mortgage costs associated with only paying interest on your loan rather than covering what you owe. This will essentially mean you’re extending your term for as many months as you pay an interest only mortgage for.

Deposit Amount

If you want to bring down the estimated monthly costs of any mortgage, then the single best way to do so is put down a larger deposit against your property value, resulting in a lower loan to value ratio, and a smaller monthly repayment.

If you’re interested in a £500,000 mortgage, then you’ve probably already put down as large a deposit as you can against the property value of your future home, and so you’re left with a £500,000 mortgage. But if there’s anyway you can put down a larger deposit, then you’ll have a smaller mortgage with smaller monthly payments.

To keep your monthly cost low, consider putting down a larger deposit wherever you’re able to.

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What Is The Best Way To Calculate The Monthly Cost Of A £500,000 Mortgage?

Before you make your mortgage application for a mortgage as large as 500K, it’s best to get an idea about the mortgage market as it stands today in the UK.

One of the best ways to do this and to understand the projected monthly cost of your future mortgage deal is to run the numbers through a mortgage calculator in the UK. An online calculator can tell you almost instantly how much you’ll likely pay each month based on different deals.

To provide the calculator with enough information to paint an accurate picture for you, you’ll need the following information to hand about your potential future mortgage:

  • amount the mortgage is for (in this case £500,000)
  • how long the mortgage is taken out over
  • the type of mortgage (repayment vs interest only)
  • the interest rate
  • any associated mortgage fees

How Much Will A 500K Mortgage Cost Me Each Month?

To stop you having to run a variety of mortgage deals through an online calculator, we’ve put together some handy reference tables below to give you a better idea about the sorts of deals you could apply for and how much that will likely cost you each month.

Repayment Mortgage Examples

Likely Monthly Payments On A £500,000 Repayment Mortgage (All Figures Given Are Accurate Estimates Only ~)
Interest Rates
Length Of Mortgage Term 2.5% 3.5% 4.5% 5.5%
5 Years £8874 £9097 £9321 £9550
10 Years £4714 £4945 £5181 £5426
15 Years £3334 £3575 £3824 £4085
20 Years £2650 £2901 £3162 £3439
25 Years £2243 £2504 £2778 £3070
30 Years £1976 £2246 £2532 £2839

Interest Only Mortgage Examples

Likely Monthly Payments On A £500,000 Interest Only Mortgage (All Figures Given Are Accurate Estimates Only ~)
Interest Rates
Length Of Mortgage Term 2.5% 3.5% 4.5% 5.5%
5/10/15/20/25/30 Years £1042 £1460 £1873 £2291

With an interest only mortgage the amount you’ll pay each month doesn’t vary depending on the length of your mortgage deal as it does with repayment mortgages because you aren’t actually repaying the loan when on an interest only deal. That means the capital payments don’t go up or down depending on how long you have to pay the lender back.


How Can I Access The Best Deals For A £500,000 Mortgage In The UK?

Most lenders will offer better rates when you have a lower loan to value ratio – the higher your deposit the less risk you appear to be and the better deals they can offer on their mortgage products.

But perhaps the single best thing you can do to improve your chances of a great deal is work with a mortgage broker who specialises in different mortgage subjects. By finding the right mortgage broker you can access far more deals thanks to their connections and improved understanding of the mortgage market.

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Can I Still Get A Mortgage With Bad Credit?

If you have a bad credit history, you can still find the perfect mortgage for you, but you’ll need to work with specialist lenders.

The best way to access these more nuanced lenders is to work with specialist mortgage brokers, like our team at When The Bank Says No. We can put you in contact with lenders who look past the credit history to find out what happened, what’s different, and your circumstances now to truly understand if you can afford the monthly repayment.

We can help you find loan terms that work for you, so why not get in touch today?

Repayments On A 500K Mortgage Summary

Although payments each month will vary from deal to deal, once you know the terms of your mortgage you’ll be able to understand how much it will cost reliably. Of course, you won’t be approved for the mortgage if it is determined that the payments are too high for you to realistically make, but by using our guide you’ll increase the likelihood of mortgage success by getting a better idea about which type of deal might work well for you.

To increase the likelihood of success still further, work with When The Bank Says No today to access lenders who will consider a range of applicants from a range of credit histories.

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Emma Jones
Emma Jones
Emma began her career in Lloyds Banking Group, first in the unsecured & secured loans department at Halifax and later as a mortgage advisor at Lloyds. During 9 years in these roles and a further 2 years at Yorkshire Building Society, Emma was able to observe the impact of the recession, and how the banks let their customers down by denying loans and mortgages. Wanting to be a driving force for change, she stepped into a market advice role where she has been able to help clients when others couldn’t. Identifying a gap in the mortgage space, Emma went on to establish When the Bank Says No. As a keen property investor, she has been the focus of features in publications including The Sunday Times and This is Money. Emma’s greatest joy is overcoming the low expectations of their customers, many of whom have all but given up on getting a mortgage due. One thing Emma has learned through her own personal struggles is every client must be treated like a human and understood better by advisors and lenders in the industry. “We all have to navigate life events which can ultimately impact your financial status. It shouldn’t mean dreams of homeownership or business growth should have the breaks applied”. Emma and her team’s passion for helping people overcome the challenges they may face when applying for a mortgage have fuelled the success of When the Bank Says No.