£250,000 Mortgage: Monthly Repayments & Income Requirements

The repayments you make on a £250,000 mortgage will vary depending on your mortgage type. Mortgage repayments are determined by the length of your term, the type of mortgage you get, and your interest rate.

Longer terms mean smaller monthly repayments but result in you paying more overall. The higher the interest rate, the more you’ll pay and if you get an interest-only mortgage, for example, you’ll only cover the interest charges, not the principal amount borrowed.

In this article, we’ll look at the monthly repayments for a £250,000 mortgage, and how much annual income you’ll need for this amount. As well as the factors that might affect how much you pay and why using a mortgage broker can help you secure the lending you need at the most competitive interest rates.

How much does a £250,000 mortgage cost per month?

At the time of writing (July 2024) the average monthly repayments on a £50,000 mortgage are £1,461. This is based on current interest rates being around 5%, a typical mortgage term of 25 years, and opting for a capital repayment mortgage. Based on this, you would repay £438,443 over the mortgage term.

Securing a mortgage with a longer term will result in smaller monthly repayments, but you’ll pay more in total over the term of the mortgage.

Talk to one of the advisors we work with to get an idea of what your repayments might be. They can help you secure favourable terms and lower repayments than you might get if you try to secure a mortgage by yourself.

How much do you need to earn to get a £250k mortgage?

What you can borrow is based on your salary. Most lenders will loan around 4 and 4.5 times your income. You’d need an annual income between £50,000 and £62,500 to be approved for a £250,000 mortgage. This is above the average UK annual salary, currently £34,900 (July 2024).

A higher income, a lower debt-to-income ratio, and a larger deposit can positively impact your borrowing capacity by increasing the income multiple that lenders are willing to offer. It isn’t easy to give exact income amounts because there are a few different factors that affect your application and how much you’ll be able to borrow:

• Your annual income
• The income multiple your lender offers
• Your general creditworthiness, as this will affect the number of lenders available to you

This is why getting a good mortgage broker on your side will make all the difference in how successful you’ll be in securing a £250k mortgage.

What income multiple will you be offered?

Most lenders review applications on a case-by-case basis and are most interested in assessing your affordability, based mainly on your income and outgoings. Some might lend you 4-4.5x times your salary, while others might go as high as 5x your income or 6x your income, which makes a huge difference in how much you can borrow.

However, it’s often only certain professions such as doctors or lawyers who can borrow this much. If you’re unsure whether you can borrow this much, getting a joint mortgage with a partner, for example, will allow you to use your combined earnings for this calculation.

Ultimately, how comfortably you can repay the loan is crucial and the less risky you appear to lenders, the higher your chances of securing the amount you need. The more eligible you are the wider the range of lenders and mortgage deals.

Given the variance in these circumstances, it’s best to consult a broker who can indicate which lenders can offer you the best deal and whether you’d meet the lender’s affordability criteria.

Example calculations table

Here we look at salary versus income multiples, which are set by individual lenders, and determine how much you could borrow according to your circumstances.

The above table is for comparative purposes only. Talk to the advisors we work with for the most up-to-date information on affordability criteria.

If you’d like to see how this works out for yourself, based on your annual income, take a look at our mortgage affordability calculator below:

How much deposit do you need for a £250,000 mortgage?

The current minimum deposit requirements imposed by lenders for a residential mortgage are between 5%-10% – this is based on the property value NOT the mortgage amount.

So, if you were buying a property with a value of £250,000 (rather than borrowing this amount) you’d need a deposit of between £12,250-£25,000 at least, and then your mortgage would be between £237,750-£225,000.

It’s not impossible to secure a mortgage for £250,000 with no deposit at all, but this is extremely rare at the moment.

For a more complex application, where there may be a bad credit issue reducing the pool of lenders available, you may need a higher deposit of at least 25%.

Most lenders ask for a minimum deposit of 20% for a buy-to-let mortgage. However, a mortgage broker with experience in this area should be able to identify some who will ask for less.

The higher your deposit the more likely you are to qualify for the most competitive interest rates as mortgage lenders will reserve their best rates for mortgages with the lowest loan-to-value (LTV).

You can see how this works on our calculator below.

How to get a £250,000 mortgage

Once you’ve found a property you like and made some calculations, the next step in your mortgage application should be to find a mortgage broker with experience in arranging mortgages of this amount. This will boost your chances of getting approved at the best terms available.

Using our free broker-matching service you can speak to the right broker by simply enquiring online. They’ll be able to help with:

• Deposit requirements: You’ll need to save a minimum deposit of 5% to 10% for a £250,000 mortgage. How much this figure will be depends on the value of the property, but a 10% deposit on a £250,000 house would be £25,000. A simple way to help you save money is to set up a savings account and put a percentage of your monthly wage, around 10 to 15%, into the account each month.
• Downloading and optimising your credit reports. It’s important to review your credit history before you apply for a mortgage, checking for any inaccuracies or outdated information that can be removed beforehand.
• Gathering all the necessary paperwork required for your application: Your broker will be able to guide you through the application process and all the documents you might need – proof of income, at least three months of bank statements, personal ID, proof of address, evidence of deposit, latest P60 form etc.
• Working out how much you can borrow. You might assume that £250,000 is the maximum you can borrow for a mortgage based on typical lender salary multiplier calculations. However, this might not be the case. A mortgage broker can assess your circumstances and eligibility for better deals from lenders, potentially allowing you to borrow more at better interest rates.
• Finding the right lender and securing the best deal for you. Your mortgage broker will be able to identify those lenders offering the best interest rate terms available across the whole market. This will save you time and, potentially, some money too.
• Navigating the Mortgage Process: Applying for a mortgage can be challenging, especially if it’s your first application. The right mortgage broker can assist you with any issues you may encounter along the way, safeguard your interests, and provide support if anything goes wrong.

Example monthly repayments for a £250,000 mortgage

The table below shows how much impact the interest rate and mortgage term can have on your repayments.

For interest-only mortgages, the repayment remains as is regardless of the term. So, for example, the repayment shown for 6% – £750 per month – would be the same if you opted for a 15-year term or a 30-year term as the capital owed doesn’t reduce and is paid off in full at the end using a separate repayment vehicle.

For the purpose of these tables, we assume the interest rate stays the same for the full length of the mortgage. Interest rates can change if you remortgage to a different rate or move from a fixed or discounted deal to the lender’s standard variable rate (SVR).

With the Bank of England base rate currently at 5.25% (July 2024) and the average mortgage rates between 5%-6% the repayment figures under these columns would be the most realistic. However, as the base rate falls in the future, mortgage lenders should follow suit and reduce their rates too.

Factors that affect monthly repayments

The broker we match you with will help you decipher any stumbling blocks that might need to be considered around your application. Your advisor will help you with this, but you should still be aware of whether they may cause any impact down the line.

• Term length: The longer the term, the lower your payments will be than for a shorter term but with more interest to pay overall. For example (using an interest rate of 5.5%), if you repay £250,000 over 10 years, your monthly repayments would be £2,713, whereas the same amount borrowed over 35 years would equate to repayments of just £1,343. However, the total interest paid over 35 years would be much higher.
• Fixed or tracker rate: You can choose between a fixed rate vs a tracker mortgage. Usually, a fixed rate will be higher, increasing your monthly repayment. But, locking in a rate can allow you to better plan your finances, as opposed to a tracker mortgage which could mean higher repayments if interest rates are raised.
• Income type: If you’re a PAYE earner, you may get slightly better rates on the high street than self-employed applicants, as lenders consider your income to be more stable. If you’re self-employed, however, don’t worry, plenty of lenders specialise in self-employed mortgages and will offer you competitive rates.
• Poor credit history: The same applies here. Your circumstances will be assessed on their merit, but a broker will help you through any problems that might have been brought about by former credit issues. Visit our bad credit mortgage section for more information on this subject.
• Age: Most lenders, especially on the high street, impose a maximum age limit on their mortgage products, meaning you’ll typically need to have finished repaying your mortgage by the age of 75-85. The older you are, the shorter the term is likely to be. However, not all lenders apply maximum age limits, so if you’re an older borrower, you might be able to achieve the term you want with the right lender.
• Second homes or unique properties: The same applies to these kinds of mortgages. Read, in more detail, about getting a mortgage on a second home or your prospects for getting a mortgage on a non-standard property.

Additional mortgage costs to consider

When arranging a mortgage, it’s important to remember that the monthly repayments will not be your only outgoing. There are several other costs involved with a mortgage, plus the ongoing costs of home ownership to consider when planning your budget.

Below, we’ve listed some of the costs you’ll need to take into account:

• Solicitor/legal fees: This fee is typically between a few hundred and a few thousand pounds, depending on the property type and searches required
• Arrangement fees: This type of fee will not apply to all lenders or products, but it’s important to find out if it applies, as it can be between 0.5%-1%% of the total loan amount. So between £750-£1,500 for a £250,000 mortgage.
• Broker fees: If you decide to use the services of a mortgage broker their fees will also need to be considered. The amount will depend on the complexity of the application. Typically, a mortgage broker will ask for a flat fee – usually between £500-£1,000 or a percentage of the amount borrowed – usually between 0.5%-1%.
• Stamp duty: This is the tax levy on residential property purchases. The tax rates for stamp duty are tiered – the higher the purchase price, the higher the percentage you are charged.
• Land registry fee: This is essentially an admin fee you pay to the Land Registry for them to change the register entry to your name. It only applies to properties valued at £100,001 and above. The fee ranges from £45 to £145 depending on the property’s value.
• Valuation fee: Your lender will undertake a valuation to check you’re paying what the property is worth. Depending on the complexity, this typically costs between £250 and £1,500.

Insurance

You’ll likely need to account for additional insurance costs when taking out a mortgage. These may include:

• Home insurance: Covers your property against damage or loss.
• Life insurance: Provides coverage for the mortgage in case of your death.
• Income protection: Helps if you’re unable to work due to illness or injury.
• Critical illness cover: Assists if you’re diagnosed with a serious medical condition

Why use Online Mortgage Advisor?

It’s crucial to the outcome of your mortgage application, and therefore the purchase of your home, to get the right expert on board from the beginning of the process. Securing a loan as high as £250,000 can require many hoops to jump through and assessment criteria to qualify for.

The highly skilled and experienced brokers we work with will look in detail at your situation and provide honest, reliable advice and actions that will help you feel supported and relaxed, while also doing the hard work to get the right outcome. They have access to corners of the market and lenders who might be the perfect fit for you, no matter how insurmountable the process may seem.

Contact us for a free, no-obligation initial consultation. Here we will listen to your situation and work to match you to the right expert. Call us on 0808 189 2301 or make an enquiry online today.