What Are The Repayments On £200K Mortgage?

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Taking out a mortgage loan means taking on the responsibility of monthly repayments, so it’s important for both you and mortgage lenders to be confident that you’re actually capable of keeping up with these mortgage repayments each month. In order to be approved for a 200K mortgage you’ll need to prove your ability to repay reliably each month.

Today we’ll run through the example of a £200,000 mortgage to help you get a better understanding of the sort of monthly payments you can expect to pay for a mortgage deal of this amount. Of course, the exact nature of your mortgage loan will affect how much your monthly repayment is, so we’ll cover a range of circumstances below to give you a better idea about how much you will likely pay on a 200K mortgage.

*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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Will I Be Approved For A £200,000 Mortgage?

Before you rush off to check an online mortgage repayment calculator to see what monthly repayments could look like for you on a 200K mortgage, you’ll first want to consider the likelihood of your being approved in the first place. The biggest factor affecting this will typically be an affordability assessment which usually has two parts:

  • Incomings & Outgoings: Here how much you’ve earned and how much you’ve spent over the past 3 months or so will be studied in depth to ensure you have a reliable annual salary and sensible spending habits so that your mortgage lender can be more confident in your ability to cover mortgage costs and interest rates every month.
  • Financial Stress Test: Before being approved for a 200K mortgage all mortgage lenders will need to stress test your finances to ensure that, should circumstances change, you’ll still be able to keep up with mortgage repayments. For example, if you’re applying with another person and you’re a dual income household, they might test to see if you could keep up with repayments if one of you were to lose their income.

What if I have poor credit?

A poor credit history doesn’t necessarily mean your application will be rejected by every lender out there, but it does mean you’ll need to be more selective in who you’re applying to. In order to access specialist lenders who are more likely to take higher risks, you’ll need to work with a specialist mortgage broker like our team at When The Bank Says No.

You should expect to pay a higher interest rate on any mortgage loan taken out whilst you have bad credit, because lenders view you as higher risk. As such, you’ll notice higher monthly repayments on a 200K mortgage with bad credit, compared to those with a stronger credit history.

Work with us to find the best mortgage deal for your circumstances, regardless of your credit history.

The Four Main Factors Impacting How High Or Low Your Mortgage Repayments Are

  • Interest Rate
  • Mortgage Term
  • Mortgage Type
  • Deposit Amount

Interest Rate

How will your interest rate affect repayments? The interest rate you agree to with your mortgage will directly impact how high or low your monthly repayments are:

  • a lower interest rate = lower monthly repayments
  • a higher interest rate = higher monthly repayments

For the vast majority of people, fixed rate mortgages are the norm. Individuals on a fixed rate mortgage sign up to a fixed interest rate for a specific time period, usually 2, 3, 5, or 10 years – after which time they’ll need to fix their rates again, which may be higher or lower than previous, or else sign up to a variable rate mortgage, where the interest rates on the loan vary depending on the interest rate at the time in the UK, meaning their monthly repayment will go up and down accordingly.

Finding the best deal on your interest rates is the key to low monthly repayments.

Mortgage Term

The shorter your mortgage term (5, 10, 15 years) the higher your mortgage repayments will be each month in order to pay your mortgage balance back in a shorter time. The longer your mortgage term (20, 25, 30 years) the lower your mortgage repayments will be each month, but the more you’ll pay back in total because of your monthly interest rate charge.

To help illustrate the difference, a £200,000 mortgage with a 3.5% interest rate looks very different over 10 vs 25 years:

  • Monthly Repayments Over 10 Years: ~£1978 (totalling £237,762 repaid)
  • Monthly Repayments Over 25 Years: ~£1002 (totalling £300,477 repaid)

As you can see, striking the right balance between a mortgage payment each month you can afford, and paying back your loan quickly enough to ensure you don’t overpay in interest is key. Later in the post we’ll cover various term and interest rate examples for a £200,000 mortgage so you can see how each affects the repayment each month.

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Mortgage Type

There are many different categories of residential mortgage in the UK, but broadly speaking, they all fall into two types: repayment mortgages or an interest only mortgage.

Repayment mortgages mean you’re in an interest, capital and repayment agreement, meaning each month you’ll be paying back the capital of the loan and any interest rate fees attached to the loan too. Capital repayment mortgages mean you’re paying towards the loan you took out to cover the property value.

An interest only mortgage differs from a repayment mortgage in that you’ll only cover the monthly repayment interest total, so you’ll be repaying on an interest only basis. This will, of course, mean it takes you longer to repay your loan when you eventually switch your repayment agreement back to your regular mortgage payments covering the loan capital, too, so you’ll ultimately end up paying more in interest.

Everybody will start out with repayment mortgages that cover interest and capital, but there may come a time when a switch to interest only is necessary because your circumstances have changed and you need some breathing space to get your finances back in order before continuing to repay in the usual way.

When you’re on a typical repayment mortgage your mortgage repayments each month will be higher than an interest only deal because you’ll also be paying back the loan balance, not just the interest rates. This will directly affect how much your mortgage costs each month.

Deposit Amount

It’s worth noting that how large or small your deposit is will contribute to how low or high your monthly payments will be. Of course, if you’re only interested in a £200,000 mortgage, then you will have already factored in the deposit amount, leaving you with a £200,000 mortgage. Your property value will be higher than £200,000 and you will have already covered the rest of the cost with your deposit.

However, by putting down the deposit you have, you’ve already lowered your monthly repayments. Say your property is worth £250,000, and your left with a £200,000 mortgage, by putting down a £50,000 deposit rather than a £25,000 deposit, your mortgage is £200,000 rather than £225,000 so you have less to pay back.

If you happen to have additional savings that means you can put down an even larger deposit, then your mortgage would be lower and so would the amount you pay back each month as a result.

How Can I Calculate How Much I’ll Repay Each Month On A 200K Mortgage?

Trying to work out your monthly repayments on a 200K mortgage yourself is far more hassle than it’s worth. By that, we mean you shouldn’t sit down with a pen and paper and try to figure out how much you’ll pay because it isn’t a simple equation. Instead, you should rely on an online UK mortgage calculator.

Online calculators are quick and efficient, and will tell you everything you need to know in a matter of seconds.

In order to get the best results you’ll need to have the following information to hand:

  • mortgage amount
  • mortgage term
  • mortgage type (interest only vs repayment)
  • interest rate
  • mortgage fees

To help give you an idea about the sort of payments you can expect to make each month on a 200K mortgage, we’ll work through a few different examples below.

How Much Will I Pay Each Month On A 200K Mortgage In The UK?

 

Likely Monthly Payments On A £200,000 Mortgage By Varying Interest Rates And Mortgage Type (All Figures Given Are Accurate Estimates Only ~)
Interest Rates
Mortgage Type Mortgage Term 2.5% 3.5% 4.5% 5.5%
Repayment 5 Years £3550 £3639 £3728 £3820
10 Years £1886 £1978 £2072 £2170
15 Years £1334 £1430 £1530 £1634
20 Years £1060 £1160 £1265 £1376
25 Years £897 £1002 £1111 £1228
30 Years £790 £898 £1013 £1135
Interest Only ALL £417 £584 £749 £917

Whilst the above table isn’t a definitive guide, the accurate estimates should give you a better idea about the monthly payment amounts for a 200K mortgage depending on various interest rates and mortgage types.

Any mortgage deal you sign will almost certainly differ from the figures above, but they should serve as an accurate estimate to give you a rough idea of the sort of monthly repayments you can expect to make if you were to have a similar mortgage with similar interest rates over a similar time period.

 

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What Is The Best Way To Secure The Best 200K Mortgage Offers?

In order to get the best deals you need to work with the best mortgage brokers. When you work with When The Bank Says No, you’re working with a team of professionals who offer mortgage advice and support to individuals who might struggle to get a conventional mortgage from traditional high street lenders and building societies.

Most mortgage lenders are wary of lending to individuals with a poor or not developed credit history, but we can put you in touch with mortgage providers who offer residential mortgages to individuals with unique circumstances. Whilst there is no guarantee that you’ll have your mortgage approved with one of these specialist mortgage providers, your chances are greatly increased.

Working with a mortgage broker to secure a 200K mortgage is a smart decision because you’ll access the best deals and benefit from their industry knowledge and expertise.

200K Mortgage Monthly Repayments Summary

Today’s post is a general guide for individuals looking into mortgage repayments each month for a £200,000 mortgage. Whatever mortgage you finally agree to will almost certainly look different to the figures discussed today, but they won’t be too far off.

Use this guide to help you think more clearly about how different mortgage terms and interest rates may affect your monthly payment and consider what striking the perfect balance between the two would look like for you.

Need help securing a mortgage after rejections from more mainstream lenders? Then work with When The Banks Says No today.

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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.