£600,000 mortgage
If you’re thinking about taking out a sizeable mortgage of 600K then one of the most important things to consider is how much your monthly payments will be. Your mortgage repayments will depend on a number of factors, including the size of the mortgage, the interest rate, and the length of time you’ll be paying it back.
We receive regular enquiries from customers who want to know much a mortgage of a certain size is going to cost them each month.
So, what does this all mean in terms of a large loan such as a 600000 mortgage? Let’s say you take out a 25-year mortgage at an interest rate of 4%. This would mean your monthly repayments would be approximately £3167.
If you increase the interest rate to 5%, your monthly repayments would go up to around £3507 – that’s an extra £340 a month, or £4080 a year.
As a guide only, the tables below provide an indication of monthly repayments.
Interest only mortgage per month
| 600K Interest Only Mortgage | ||||||
|---|---|---|---|---|---|---|
| 2% | 3% | 4% | 5% | 6% | 7% | |
| 10 years | £1000 | £1500 | £2000 | £2500 | £3000 | £3500 |
| 15 years | £1000 | £1500 | £2000 | £2500 | £3000 | £3500 |
| 20 years | £1000 | £1500 | £2000 | £2500 | £3000 | £3500 |
| 25 years | £1000 | £1500 | £2000 | £2500 | £3000 | £3500 |
| 30 years | £1000 | £1500 | £2000 | £2500 | £3000 | £3500 |
The above figures only include the mortgage interest, there is no provision for repayment of the capital sum borrowed.
Repayment mortgage per month
| 600K Repayment Mortgage | ||||||
|---|---|---|---|---|---|---|
| 2% | 3% | 4% | 5% | 6% | 7% | |
| 10 years | £5520 | £5793 | £6074 | £6363 | £6661 | £6966 |
| 15 years | £3861 | £4143 | £4438 | £4744 | £5063 | £5392 |
| 20 years | £3035 | £3327 | £3635 | £3959 | £4298 | £4651 |
| 25 years | £2543 | £2845 | £3167 | £3507 | £3865 | £4240 |
| 30 years | £2217 | £2592 | £2864 | £3220 | £3597 | £3991 |
The above figures include both capital and interest combined into one monthly payment.
What affects the monthly payment figure?
Your monthly mortgage payment is calculated using a few different factors:
Term
The term of your mortgage is the length of time you have to pay it back. The most common mortgage terms are 10, 15, 20 or 25 years, but some lenders will offer terms of up to 40 years, so called marathon mortgages.
The longer the term of your mortgage, the lower your monthly payments will be, as you’ll be spreading the cost of the mortgage over a longer period. However, you will end up paying more interest overall as you’ll be paying it back for longer.
Your monthly payments will also be affected by any fees or charges that come with your mortgage. These can include arrangement fees. It’s important to factor these in when you are working out how much your monthly mortgage payments are going to be.
The best way to work out how much your monthly mortgage payments are going to be is to use a mortgage calculator. This will give you an estimate of what your monthly payments could be, based on the size of the mortgage, the interest rate and the term.
You will find more useful information in our article: “How much does the average mortgage cost?“
Interest rate
The interest rate is the percentage of the mortgage that you have to pay each year in addition to the amount you’ve borrowed. The interest rate will affect how much your monthly payments are, as well as the total amount you end up paying back.
The interest rate can be fixed, which means it will stay the same for the length of the mortgage term, or it can be variable, which means it could go up or down.
If you have a fixed-rate mortgage, your monthly payments will stay the same, even if interest rates go up. This can give you peace of mind and make it easier to budget for your monthly payments. However, if interest rates fall, you won’t benefit from this as your payments will stay the same.
With a variable-rate mortgage, your payments could go up or down, depending on what happens to interest rates. This means you need to be prepared for your monthly payments to change. However, if interest rates fall, your payments will also go down.
Repayment method
There are two main repayment methods for mortgages – repayment and interest-only.
With a repayment mortgage, you pay back the amount you’ve borrowed, plus the interest, each month. This means that your debt will gradually go down over time and you will own your property outright at the end of the mortgage term.
An interest-only mortgage means you only pay the interest on the amount you’ve borrowed each month. You don’t actually start to repay the amount you’ve borrowed until the end of the mortgage term. This means that your monthly payments will be lower than with a repayment mortgage, but you will still owe the full amount at the end of the term. When you receive your annual mortgage statement, the remaining balance will largely be the same each year.
You can also choose a combination of repayment and interest-only, where you pay back a portion of the amount you’ve borrowed each month, plus the interest. This is known as a part and part mortgage and it can help to keep your monthly payments down.
How do part repayment and part interest only mortgages work?
Can you get an interest only mortgage?
An interest only mortgage is normally offered by most lenders but not all. They will be keen to understand how you intend to pay back the mortgage before approving this request.
When compared to a capital and interest mortgage, the total interest paid will be higher, thus making the overall cost more expensive.
What’s the best mortgage term?
The best mortgage term is the one that fits your situation. Most people opt for a term of 25-30 years at the beginning of their house buying journey.
Shorter terms (e.g., 15-20 years) will mean higher monthly payments, but you’ll pay significantly less interest overall.
Longer terms (e.g., 25-30 years) do result in lower monthly payments (which are more affordable), but you’ll end up paying much more in interest over the life of the mortgage.
What’s the longest mortgage term you can get? In the UK, the attitude towards mortgage terms is evolving. Currently, the longest mortgage term available is 40 years. This extended term is a significant shift from the traditional 25-year standard that many homeowners are accustomed to.
How do I make my monthly payments cheaper?
Several strategies could help make your mortgage payments more affordable.
Reduce the Mortgage Amount:
- This might seem obvious, but it’s the most direct way to lower payments.
- Increasing your deposit means borrowing less, resulting in smaller monthly payments.
Extend the Mortgage Term:
- Spreading your repayment over a longer period (e.g., 30 years instead of 25) reduces your monthly payments.
- Important: You’ll end up paying more in interest overall with a longer term.
Get a Lower Interest Rate:
- A lower rate directly translates to lower monthly costs.
- Consider remortgaging (switching to a new mortgage deal)
Switch to Interest-Only (With Caution):
- You’ll only pay the interest on your loan, significantly lowering monthly payments.
- Be Aware: You won’t be paying off the original loan amount. You’ll need a plan to repay the full mortgage eventually.
Consider a Part and Part Mortgage:
- The ‘part and part‘ hybrid option combines interest-only and repayment elements.
- It can offer a compromise between lower payments and gradually reducing the debt.
Look into mortgage offsetting:
- An offset mortgage uses your cash savings to reduce the cost
- You only pay interest on the net balance (debt minus savings)
You should seek advice from a mortgage broker before making any of these changes.
How much do you need to earn for a £600,000 mortgage?
A £600,000 mortgage requires a significant income to qualify.
As a general guideline, most lenders use a multiple of your annual salary to determine your borrowing potential, often capping it at around 4.5 times your income.
So for a £600,000 mortgage, you might need a household income of roughly £130,000 per year or more.
If you’re applying with a partner, lenders will combine your incomes, increasing your borrowing capacity.
Are you a ‘professional’?
If you’re a qualified professional – perhaps an accountant, doctor, solicitor, or engineer – special professional mortgages might be accessible to you due to your career’s perceived lower risk and longevity.
A ‘professional mortgage’ caters to individuals in certain occupations that are generally regarded as stable and well-paid.
Careers such as medical professionals, teachers, architects, and surveyors also qualify. You can often obtain more favourable terms, such as higher borrowing multiples or lower deposit requirements.
In our quest for a £600,000 mortgage, a qualifying professional may only need an income of £100,000-£120,000, using enhanced multiples.
FAQ
Frequently Asked Questions
How does a repayment mortgage work?
With a repayment mortgage over 25 years the lender has to calculate how much to charge you each month so that the loan is fully repaid at the end. So each month you will pay some interest and some capital.
How much does a £625,000 mortgage cost?
For more specific mortgage amounts we recommend using our mortgage repayment calculator.
How much Stamp Duty will I pay?
The amount of Stamp Duty payable will be confirmed by your Solicitor. You may find our Stamp Duty calculator handy to give you a rough idea.
What is a key facts illustration?
When a mortgage adviser recommends a mortgage, they must give you a key facts illustration (KFI) document before you apply. This is a mortgage quotation which details the costs and fees for the mortgage
What is a part and part mortgage?
This is a repayment method that combines both interest only and repayment together. Part and Part is slightly cheaper than a full repayment mortgage. Qualified mortgage brokers can explain this in more detail.
Will I have to prove my income?
Yes, lenders need to ensure that any mortgage is affordable so they will want to see proof of your income. The proof required will depend on your employment type.
