£400,000 Mortgages

Getting a mortgage for £400,000 is a big financial commitment, but it’s 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 relevant section 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. 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 many lenders now offer 30—and 35-year mortgages, and some have extended 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 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 times your annual salary and 5 times, 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 salaries and income multiples:

Try our mortgage affordability calculator below to determine 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 mortgage 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 ensure you’re paying the best possible rate and signing up for the right product for your circumstances. A broker specialising 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 have access to exclusive deals, can give tailored advice, and are available throughout the deal to ensure swift resolution of any issues.

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

What size deposit do you need?

For a property worth £400,000, you 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 will 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 put down, the better.

What other factors affect how much you pay?

Several other factors, in addition to rate and term length, will impact the cost of your mortgage each month.

Repayment versus interest only

The type of mortgage you opt for will significantly affect your monthly costs. With a repayment mortgage, you repay 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 repay the full loan, so you’ll need a viable repayment plan 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 can 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, self-employed with complex income, work part-time, or 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 charge 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 specialising 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, which 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 to talk to a specialist broker who can 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. Call 0330 822 0505 or make an enquiry to 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.