£400,000 Mortgages

Getting a mortgage for £400,000 is a pretty big financial commitment but it’s entirely possible, as long as you meet lenders’ eligibility and affordability criteria.

In this guide, we’ve put together everything you need to know about getting a mortgage of this size, including how to boost your chances of getting approved, typical repayments on a £400,000 mortgage and how a broker can help you.

Read on for more information or jump to the section that’s relevant to you via the links below…

How do you get a mortgage for £400,000?

In order to be accepted for a £400,000 mortgage, you’ll need to meet certain affordability criteria. Each lender has its own specific benchmarks, but in general, the main factors they’ll look at are your income and the size of your deposit. They’ll also take into consideration your credit history, the type of property you’re buying, your employment type and your age.

What are the typical monthly repayments on a £400k mortgage?

The amount you pay each month on a £400,000 mortgage will depend on two main factors: your interest rate and the term of the loan. The variables used in the information below would suggest your repayments could range between £1,403 and £2,002.

Try our mortgage repayments calculator below to get a clearer idea of how your monthly repayments will look.

The higher the rate, the more you’ll end up paying. At the time of writing, average rates are between 2.5% and 3.5%. The rate you pay will depend on various factors including your income, credit history, employment status and the type of property you’re purchasing.

The average mortgage term in the UK is 25 years but a large number of lenders now offer 30 and 35-year mortgages, and some have stretched their maximum term to 40 years.

While a longer term will make monthly repayments more affordable because you’re spreading the cost of the mortgage out over more years, in the long term, you’ll end up paying more because you’ll be paying interest over a longer period of time.

Example repayment calculations

The tables below show how different interest rates and term lengths can impact how much you pay for your mortgage overall. All tables in this article were created purely for example purposes – you should speak to a broker for bespoke calculations.

The below calculations are based on a £400,000 mortgage with an interest rate of 2.5%.

The below calculations are based on a £400,000 mortgage with an interest rate of 3%.

The below calculations are based on a £400,000 mortgage with an interest rate of 3.5%.

How much do you need to earn?

Most lenders will let you borrow between 4 and 5 times your annual salary, so based on these income multiples, for a £400k mortgage, you’ll need to earn between £80,000 and £100,000.

The table below shows how much you can borrow based on various different salaries and income multiples:

Try our mortgage affordability calculator below to work out whether you will qualify for a mortgage of this amount based on typical income multiples.

How a broker can help you get approved for a larger mortgage

Whatever size mortgage you need, it’s always a good idea to seek advice from a whole of market broker who can help you find the best deal and guide you through the application process. For a £400,000 loan, however, a broker is highly recommended.

Taking out a mortgage of this size is a big financial commitment and you’ll want to make sure you’re paying the best possible rate and signing up to the right product for your circumstances. A broker who specialises in larger-than-average loans will be able to identify the right lender for you and negotiate a deal on your behalf, saving you time and money.

They also get access to exclusive deals, can give you tailored advice and be on hand throughout the deal to make sure any issues are dealt with swiftly.

Get in touch today and we’ll match you with a broker who specialises in larger-than-average loans from our extensive network.

What size deposit do you need?

For a property worth £400,000 you would usually need a deposit of at least £40,000, although some lenders will accept £20,000 under the right circumstances.

As with all mortgages, the bigger your deposit, the more likely you are to be accepted. Most lenders will offer a maximum loan-to-value (LTV) of 90%, which means you’ll need to put down at least 10% of the property price. The size of your deposit will also determine the rate you pay, so the more you can put down the better.

What other factors affect how much you pay?

In addition to rate and term length, several other factors will impact how much your mortgage will cost each month.

Repayment versus interest only

The type of mortgage you opt for will have a huge bearing on your monthly costs. With a repayment mortgage, you pay back some of the interest and some of the initial loan. With an interest-only mortgage, you only pay back the interest charged on your loan each month, unless you choose to make optional capital payments. You then repay the full amount borrowed as a lump sum at the end of your mortgage term.

Remember, although an interest-only mortgage means lower monthly repayments, you still have to pay back the full loan in the end so you’ll need a viable repayment plan in place, approved by your lender.

Employment type

If you’re in a full-time, employed job, lenders will typically deem you a low risk borrower as they’ll be reassured you’ll be able to afford your monthly repayments. This could mean securing a lower interest rate and having a wider range of lenders and deals to choose from.

If you’re in what’s deemed ‘non-standard’ employment – for example you’re self-employed with complex income, you work part-time or you’re a contractor with limited proof of earnings – you’ll be considered higher risk because of your potentially irregular income. If a lender agrees to lend to you, they may end up charging you a higher interest rate to balance out the risk.

Credit history

If you have any marks on your credit history, your lender may charge you a higher interest rate to counterbalance the risk of lending to you. This would mean higher overall costs.

A broker who specialises in securing mortgages for borrowers with bad credit can help you find the most competitive rate for your circumstances.

Your debt-to-income ratio

Lenders will use your earnings to assess whether or not you can afford the loan. They use a calculation called your debt-to-income (DTI) ratio, which is your monthly income offset against your outgoings. Lenders look more favourably – and offer the most competitive rates – to borrowers with lower DTI ratios as it means you have more disposable income each month to put towards your mortgage repayments.

Try our debt-to-income ratio calculator below to work out what yours is.

Get matched with the right broker for your £400k mortgage

The cost of a £400k mortgage can vary significantly depending on the rate you pay and the length of term you opt for, among other things.

That’s why it’s important to carefully consider your options before making any decisions.

Your best bet is talking to a specialist broker who’ll be able to give you customised advice and connect you with the most appropriate lender for your circumstances.

We work with brokers who have a track record of helping borrowers get £400k mortgages. Give us a call on 0808 189 0463 or make an enquiry and get matched with an expert today for a free initial conversation.

We hand-pick all the advisors in our network and rigorously vet them so you know you’re getting the best possible advice.