£5,000 Per Month Mortgages

If, after all of your outgoings and expenses, you’ve worked out that you can comfortably afford to pay £5,000 a month in mortgage repayments, then the next step is to explore what size of mortgage you could get.

This guide explains what factors might affect a £5,000 a month mortgage, the various eligibility criteria you’d need to meet and how to make your affordability go further.

How much mortgage can you get for £5,000 per month?

There’s actually no magic number that could serve as a definitive answer to this question. A combination of factors are at play, both directly and indirectly, meaning that what £5,000 per month might get one person will vary for another. Some of these factors include:

• Your deposit size
• Your credit history
• Any outstanding debt (other than for your mortgage)
• The property type

These influence the interest rates and mortgage terms a lender will be willing to offer but wouldn’t directly affect the amount you’re able to borrow. Affordability is assessed using two key factors – your annual income and your outgoings.

As a starting point, most lenders will use your annual salary and apply a multiple of that to assess how much they may be willing to let you borrow. You can use our mortgage affordability calculator below to see how this may work out for you, based on your own annual income:

Whilst a mortgage affordability calculator will give you a good indication of the mortgage you could qualify for, an expert would be able to assess your individual situation and provide a more accurate estimate.

Brokers understand the lending market and have a better sense of the rates and terms likely open to you, especially those offered by private lenders.

How terms can affect payments

The longer the term for paying back your loan, the smaller the monthly repayments. However, you will end up paying back more in interest overall.

The most common mortgage term is 25 years although some banks such as Virgin Money, Bluestone Mortgages and Pepper Money do offer 30 and 35 year mortgages. While fewer offer up to 40 years, they are available but tend to come with a higher loan to value (LTV) – usually 85% and above.

Whatever term you opt for you have to be sure that £5,000 is an amount you’ll be able to consistently afford regardless of a change in circumstances. A broker would be able to advise on what length might work best for you, especially if you’re nearer retirement age.

How rates can affect payments

Ideally you want as much of your £5,000 going toward loan repayment rather than paying interest so you want as low a rate as possible.

The below table factors in some different term lengths, deposits and rates to give an idea of how big a mortgage £5,000 a month could get you (Remember, though, a lender’s affordability assessment will ultimately decide how much you’ll be able to borrow).

Please note that the rates displayed in the tables are purely for example purposes and may not be representative of what is currently available.

Whether a lender is willing to offer you such a low rate will depend on how reliable a borrower they perceive you to be, so if you have a lot of debt and a bad credit history they may be less inclined to do so. If you have a decent sized deposit, a good credit record and fall into a category of employment considered dependable – such as a dentist, doctor or lawyer – then that rate is more realistic.

Additionally, you’ll have to consider whether you’d like a fixed or variable rate mortgage. A fixed rate will stay the same throughout the length of a specific period (usually 3, 4 or 5 years) however it’s likely to be a little higher than a variable rate which will fluctuate depending on the market.

How a broker can help with a £5,000 per month mortgage

When it comes to a mortgage that equates to £5,000 a month in repayments, working with a broker is a must. With access to exclusive rates via private and specialist lenders, they can source you a deal more likely to help your money go further. Additionally, in this scenario, a broker can:

• Confirm that a £5,000 mortgage payment is affordable for you before you apply to a lender, avoiding a possible application rejection.
• Negotiate a deal on your behalf. The brokers we work with are well-versed in finding and obtaining mortgages over £1 million and in dealing with multiple assets as part of an application. They can work with a lender to get terms that work for you.

If you get in touch we’ll arrange for a broker with experience arranging mortgages of this size to contact you straight away.

The eligibility criteria

While you may have calculated with certainty that £5,000 a month is what you can afford, lenders will want to check that for themselves and they’ll do so by analysing your financial situation against a pre-set criteria. Each lender’s requirements differ slightly and so it’s likely they’ll give differing figures for what they think you can afford to borrow.

When assessing your application, lenders will be looking at:

• The size of your deposit: Most lenders consider a loan with an LTV of 75% which means you’d need a 25% deposit. If you’re considering a mortgage of £1.5 million that would mean putting down £375,000. If there’s a possibility you can increase that, the number of lenders willing to loan to you will also increase.
• Earnings and expenditure: A lender will need to ascertain how you can afford such a large amount each month. That means looking at how much you earn and how you earn it – for example, some lenders require extra documentation if you’re self-employed. They’ll also want to know what you spend your income on, to assess what your true disposable income actually is.

If you have a salary higher than £300,000 or £3 million in assets, you are classed as a high-net-worth individual. As such lenders are granted, by the UK’s Financial Conduct Authority, to take a more holistic view and consider additional factors such as investments, other properties, and future earnings.

Most lenders will let you borrow 4.5 times your annual salary increasing that to even 5 or 6 times in specific circumstances however some, in order to reduce risk, limit the amounts they’re willing to lend at £750,000 or £1 million. A broker would be able to identify a lender specialising in a larger mortgages such as this.

• Age: This can affect the terms available to you because, if you’re slightly older and retirement is in the near future, this could affect your ability to keep making repayments.
• Debt: Do you have any, what type is it and how much is it? These are questions lenders will be asking to ascertain whether any debt you do have speaks of high risk. Paying off existing debts prior to applying for a mortgage can help to limit the potential risk factors lenders might be looking at.

Get matched with a broker who specialises in large mortgages

If you’re looking to pay such a large amount each month as a repayment you want to have tailored, expert and timely advice at your disposal. This should come from someone who understands the lending market and how to get you the best mortgage deal.

As experts in their field, the brokers we work with know the lenders to apply to, what they’re looking for and how to get a mortgage in principle at the quickest rate so you can begin your property search.

Call 0808 189 0463 or make an enquiry today to get matched to a mortgage advisor and schedule a free, no-obligation consultation.