Getting A Mortgage For £400-£500 a Month

According to Lloyds Bank, the average UK mortgage payment in 2021 was £753, but don’t worry, if your budget is in the region of £400-£500, there are still plenty of options.

In this article, we’ll look at what factors influence the size of mortgage you’re offered, examples of what you could get with your budget, and how a broker can help you make the most of your options.

What size mortgage can you get for £400-£500 per month?

As so many factors can influence the mortgage you’re offered, it’s difficult to give one definitive answer to this question. A mortgage is usually based primarily on a multiple of your income, rather than an amount you have budgeted for monthly payments.

Obtaining an agreement in principle before you start looking for a property will be particularly helpful if you’re on a fairly tight budget.

Whatever your budget, a mortgage broker can recommend ways to maximise your target amount and help you find a suitable property.

In order to demonstrate how much you may be able to borrow for a mortgage within this budget range, each of the below examples assumes that:

• You take a standard repayment mortgage
• The mortgage term is 25 years
• The interest rate is 2.5%
• You have provided a 10% deposit

Monthly repayments of approximately £400 could get you around £75,000.

Monthly repayments of approximately £450 could get you around £82,000.

Monthly repayments of approximately £500 could get you around £91,000.

Aside from the assumptions we’ve made above, your own personal circumstances also affect how much you can borrow, so these figures are for demonstration purposes only.

Calculate your maximum borrowing

Try our mortgage affordability calculator below to work out how much you could borrow based on the typical income multiples that mortgage lenders use.

How interest rates and terms impact your repayments

These tables demonstrate how much your mortgage payments might vary depending on the term length and interest rate. These examples have been tailored to borrowers who have budgeted between £400 and £500 per month for their monthly repayments.

£400 per month

£450 per month

£500 per month

*Interest rates vary from lender to lender and could be higher or lower than shown in the table. Typical rates are purely for example purposes and may not be representative of what is currently available on the market.

How a broker can help

As you can see, many factors can affect how much you could potentially borrow and what your repayments could be, regardless of your budget.

Whether you’re looking to pay £400 or £500 per month, a mortgage broker will be able to look at your full circumstances alongside the entire market of lenders and products available, in order to maximise the level of borrowing you can get with your budget.

We work with a large network of expert mortgage brokers, many of whom specialise in certain niches within the mortgage market. For example, if you’re concerned about getting a mortgage because you’re self-employed, slightly older, or even have bad credit, we’ll be able to match you with a specialist adviser who will be able to help you find a suitable lender for your circumstances.

Criteria affecting how much you can borrow

Lenders typically use a multiple of around 4.5 times your annual income to determine the mortgage loan, but this can vary (lower or higher) based on any of the below circumstances, which largely fall into two categories:

Direct impact

These factors directly impact the maximum amount you can borrow

• Income: The more you earn, the maximum you could potentially borrow and some lenders use higher income multiples than others – up to x6 salary under the right circumstances. There are also lenders who will allow you to declare supplemental earnings, such as bonuses, benefits and freelance work.
• Outgoings: This includes fixed outgoings and existing credit commitments. There’s no set amount of outgoings that lenders consider too high, but this will be factored into your affordability assessment and offset against your income.

Indirect impact

The below can indirectly impact your maximum borrowing by limiting or increasing the number of lenders and deals that you qualify for.

• Property type: Some lenders might decline you if they consider the property to be of non-standard construction, i.e thatched cottages
• Your employment status: Some lenders assess self-employed income less favourably than employed income, which could indirectly affect the amount offered
• How much deposit you have: Although some lenders accept as low as 5% minimum deposit, providing more than that will increase the number of deals you qualify for by reducing the LTV (Loan-to-Value)
• Your credit status: Having a poor credit score can affect how many lenders you have access to, but there may be specialist bad credit lenders that can help
• Your age: As well as age impacting the maximum term of your loan, some lenders will reduce their borrowing to older applicants if their income is impacted by retirement during the loan term

How to make the most of your budget

The more you earn, the more you can borrow, but your mortgage eligibility also impacts this by affecting the range of deals you qualify for. The cost of property in the UK continues to rise, and it may still be difficult to buy the home of your dreams with a budget of £400-£500 per month.

The good news is that there is a range of home ownership schemes that you could use to increase your options.

The First Homes Scheme

With this scheme, key workers and first-time buyers can get properties for at least 30% (and up to 50%) less than the local market value. You could, therefore, potentially buy a home valued at £100,000* with £70,000 or less, making it much more achievable with a budget of £400-£500 per month.

Whilst developments are only available in certain parts of England at the moment, the number of First Homes properties is expected to increase significantly in the coming years. More information can be found on the government’s official website.

*Please note actual house prices will vary depending on type and location.

The Shared Ownership Scheme

This scheme allows applicants with a smaller budget to purchase a percentage of their home (between 10-75%) to obtain a more expensive property than the mortgage they’re able to obtain.

Ownership of the property can be increased in increments as little as 1% at a time until you own the whole property if you wish. Remember to factor in that you’ll pay rent to the housing association that owns the remaining share of your home. More information about the Shared Ownership scheme can be found in our standalone guide.

Get matched with an expert in lower mortgages

The brokers we work with will consider your circumstances and recommend the best mortgage options available to you, whatever your budget. They all offer an initial discussion for free. Find out how their knowledge, experience, and access to specialist products could help to get you the best deal available!

Simply contact us on 0330 822 0505 or via this form, and we’ll match you with one of the expert brokers that we work with straight away.