£3,000-Per-Month Mortgages

So, you’ve worked out that you can afford to spend £3,000 per month on your mortgage and you know that mortgage providers calculate the maximum amount you can borrow based on income multiples. So, working out how much mortgage you can borrow for £3,000 per month should be easy, right?

Unfortunately, it’s not quite as straightforward as that. In this article we’ll explain how lenders assess mortgage applications, what factors affect the amount you can borrow, and how a broker can make sure you get the best deal possible with this monthly amount at your disposal.

How much mortgage can you get for £3,000 per month?

Applicants with a secure income (single or joint) in the region of £165,000 per annum, a deposit of around £130,000 and a healthy credit rating, could expect to borrow £750,000 towards the purchase of a home valued at around £880,000 to £900,000 for a monthly payment of £3,000.

It makes sense to do your own affordability calculations as well, but you will also need to pass a lenders’ affordability test – which is predominantly based on your annual income and outgoings, not your monthly budget – and meet their other eligibility requirements.

The amount you can borrow will be determined, initially, by your income and the lender you approach. Mortgage lenders cap borrowing based on a multiple of your annual salary, usually 4.5 times your earnings, though some mortgage providers go higher.

Try our mortgage affordability calculator below to work out how much you can borrow, using your own salary, based on the typical income multiples that lenders use.

How the term and interest rate can affect payments

Typically, mortgages are taken over 25 years, but this doesn’t need to be the case. Borrowing over a longer term can reduce your monthly payment. However, this will increase the overall cost of borrowing as you will pay interest over a longer period throughout the full life of the mortgage.

Similarly, reducing your term will save you money in the long run but could reduce the amount you can borrow if you’re determined to stick to a £3,000 per month budget.

Try our mortgage repayments calculator below to work out how your monthly repayments might look, across a range of interest rates and terms.

Example calculations

This table provides examples of how much you could borrow for £3,000 per month according to the rate and term of your mortgage (Remember, though, it’s a lender’s affordability assessment – based on your annual income and outgoings – that will ultimately determine this outcome):

How a broker can help you save money

With so many different lenders, terms and rates available, trying to fathom out the mortgage market without expert assistance is likely to leave you confused and uncertain.

As each lender carries out their own affordability calculation, it’s important to find a lender with criteria that matches your circumstances and agrees that £3,000 per month is affordable. If you need your income to go further, a broker could match you with a mortgage provider who uses higher income multiples.

A broker with expert knowledge of the UK mortgage market will identify the right lender and best deal to ensure you maximise your borrowing capacity and get the lowest rate possible.

Other eligibility factors

Other factors that will affect how much you can borrow – both directly and indirectly – include…

• Employment type: High street lenders often reserve their best rates for applicants with a steady PAYE income. If you are self-employed, a contract worker or freelancer you may find that the lowest interest rates with big name lenders are not available to you even if you have calculated that £3000 is affordable.
• Income: Some specialist lenders don’t use income multiples and will assess each application on its own merits. One of these may be your best option if you know you can afford £3000 per month but don’t match the income criteria for mainstream lenders.
• Deposit amount:  The size of your deposit can affect the number of lenders willing to consider your application and, subsequently, the interest rate you are offered. The larger your deposit, the lower your loan to value (LTV) – that is the amount you borrow expressed as a percentage of the property’s value. A lower LTV gives lenders greater security and enables them to lend at lower rates.
• Credit file: A good credit history will help you get the best rates on your mortgage. Bad credit will not prevent you getting a mortgage for £3000 per month but will mean you borrow at a higher rate and have reduced borrowing capacity.

Types of mortgages

You will also need to consider the type of mortgage you want. Repayment mortgages are the most common type of home loan and are usually your only option for residential borrowing.

If you’re looking to spend £3,000 on a buy to let (BTL) property, it’s worth considering an interest only mortgage. Your monthly repayments will only cover the interest so will be significantly lower. However, you won’t reduce the capital owed over the term of the loan so will need to prove you have a repayment vehicle to clear the balance when your loan term ends.

Both repayment and interest only mortgages are often cheaper if you borrow at a variable rate, but your monthly repayments are then subject to change. A fixed rate makes it easier to budget as you know how much you will pay each month while you are tied in.

Capped rates will allow you to benefit from interest rate cuts but set a maximum ceiling to protect you from excessive rises.

Get matched with a broker specialising in larger mortgages

If you’re considering a mortgage that will cost £3,000 per month, you’re dealing in large amounts where even the slightest change in interest rate or term can have a huge impact on the cost of borrowing.

A broker will assess your circumstances, do the leg work, and find the best deal for you – saving you time and money.

Our broker matching service will connect you with a broker who has a strong track record helping people like you get the best rates available.

Call now on 0808 189 0463 or enquire online to arrange a free no-obligation chat.