£30,000 Mortgages

A £30,000 mortgage sounds like a relatively small amount to secure a property purchase, but you may still wonder what the best way to get one is. You’ll likely want to know how much you need to earn to be eligible and how much your monthly repayments are going to be.

This article outlines how much annual income you usually require along with what interest rates may be available and which other factors can affect those monthly repayments.

What would the monthly repayments be on a £30,000 mortgage?

Knowing what your monthly repayment could be can be helpful when budgeting for your mortgage. Try our mortgage repayments calculator below to get a clearer idea of this.

Example calculations

We’ve created the example calculations below to illustrate how much you can expect to pay each month based on different rates and terms lengths.

How much do you need to earn to get a £30,000 mortgage?

Mortgage providers have traditionally used a general rule of thumb between 4-4.5 times annual household income when calculating how much they will lend. Bearing that in mind, if you want to borrow £30,000 to buy a property, you will need between £6,666.67 and £7,500. That can be your sole income or it can be combined with another person or people in a joint mortgage application.

You may find that some providers are happy to loan at a higher multiplier than 4 times your earnings. A few lenders will go to 6 times a household’s combined income. In practice, that means you will need to earn £5,000 a year.

The exact amount you can borrow will be based on a multiple of your annual salary. Try our mortgage affordability calculator below to work out whether your income stretches far enough to get a mortgage of this amount.

Providers will want you to meet other criteria to be eligible for such a mortgage. Your choice of lenders, and therefore the deals available to you might vary based on the following factors…

• deposit amount
• age
• credit history
• employment type

Your income source and outgoings will be the two key factors under consideration in their affordability calculations. Some lenders may even loan more than 6 times your household income if these factors are favourable enough.

How is this calculated?

Below is a table showing the mortgage amounts possible with a number of hypothetical household incomes. While using the common multiples of 4, 4.5 and 6, may only give a broad indication of what you need to earn to get a £30,000 mortgage, they are still useful to at least get an idea of income requirements.

How a broker can help with a mortgage of this value

A mortgage for £30,000 is considered to be low, but that does not make the process any less complex. Brokers can therefore be an invaluable aid when applying for several reasons. Firstly, they know the market inside out. That knowledge means they know the best lenders for you, depending on your specific circumstances. Your chances of having an application approved are better as a result.

They will also know what providers offer higher multiple lending should you need to stretch your income a little further. Plus, they will be able to find you the best rate possible when all your eligibility criteria are taken into account.

The brokers we work with can help you save money on a mortgage while also making the whole process quicker and smoother. Get in touch with us so we can put you in contact with an advisor today.

Factors affecting monthly payments

In addition to interest rates, mortgage term and the amount you want to borrow, there will be a number of other factors that could indirectly affect your repayment amounts, such as:

Credit history

If you have a good credit history, you’ll be viewed as a lower risk applicant and can, therefore, expect more lenders to approve your borrowing request for the full £30,000, which, as a result, should mean you qualify for the best rates available.

With a bad credit history you can still get approved but with the number of lenders who will consider your application, the interest rate may end up being higher.

Deposit

Lenders prefer seeing a larger deposit as a form of security for them. It lowers the Loan To Value (LTV) ratio, and also decreases their risk exposure. They are more likely to offer a lower rate on a £30,000 mortgage with a low LTV. Having a bigger down payment will also decrease your monthly repayments.

The exact amount of deposit you’ll need to put down to get a £30,000 mortgage will depend on the value of the property you’re buying. Most lenders will require at least 10% of it, although some may accept a 5% deposit under the right circumstances.

Term length

If you are looking to lower your repayments to make the loan more affordable, you could consider extending the mortgage term. Commonly, they are taken out on a 25 year basis, but some lenders are happy to extend the term up to 40 years.

Mortgage type

Mortgage types affect monthly repayments due to the differing ways interest rates are determined. A prime example would be an interest only mortgage where you only have to repay the interest on the loan during the term. That means your repayments are lower, but a separate repayment vehicle will still be needed to cover the payment back to the lender of the original capital amount.

Tracker mortgages move in line with a base rate outlined in your mortgage agreement. Commonly, the base rate is either LIBOR or the Bank of England rate. A mortgage provider will add a set amount of interest on top which they then charge you. Whenever the base rate changes, so will your repayments.

Fixed rate mortgages are popular as they set the interest rate (and therefore repayment amount) at the start of a mortgage for a fixed period of time – commonly, 2, 3, 5 or 10 years. When that period ends, you can agree a new interest rate with your provider or revert to the standard variable rate.

Get matched with a broker specialising in low mortgages today

Applying for a mortgage of £30,000 can be more complicated than it may first appear, especially if you do not meet providers’ eligibility criteria.

Using a broker can take all that complexity out as they guide you through the application and will know which lenders to approach if you have a low income, a low deposit or a bad credit score. Consequently, using a broker will often improve your chances of being approved.

Our mortgage advisor matching service is free and there is no obligation to use the broker we connect you with. Call 0808 189 0463 or make an enquiry so we can put you in touch.