Head of Content
Mortgage Advisor & Director
If you have done your budgeting and worked out that you can afford £1,000 per month for mortgage payments, you may be wondering what size mortgage that can get you. Here we explain all you need to know to find the answer.
What size mortgage can you get for £1,000 per month?
At the time of writing (September 2024), you could get a mortgage of around £189,500 with a budget of £1,000 per month set aside for your mortgage repayments.
This is because a typical residential mortgage under the current market conditions would have a 4% interest rate, a 25-year duration and be taken on a capital repayment basis.
Taking out a mortgage on these terms would mean your monthly repayments are exactly £1,000 a month and you would repay a total of £300,075 by the end of the agreement.
Compare the latest mortgage rates for FREE
What factors affect how far your budget will go?
The mortgage size that a £1,000 monthly budget could get you will vary based on several different variables. The main factors to be aware of are as follows:
Interest rate
The interest rate you qualify for might be higher or lower than the 4% we used above for example purposes. If the rate you are offered is higher, your budget won’t go as far.
For example, if you qualify for an interest rate of 5%, your maximum borrowing on a capital repayment taken over 25 years would be £171,000, if you need your payments to be £1,000.
The table below shows how much you could borrow on a capital repayment basis across different interest rates and a 25-year term to achieve monthly payments of £1,000.
|
Mortgage Amount |
Interest Rate |
Monthly Repayments |
|
£199,700 |
3.5% |
£1,000 |
|
£189,500 |
4% |
£1,000 |
|
£179,900 |
4.5% |
£1,000 |
|
£171,000 |
5% |
£1,000 |
|
£162,770 |
5.5% |
£1,000 |
|
£155,200 |
6% |
£1,000 |
Term length
Your budget of £1,000 per month will go further if you take your mortgage over a longer term length, but keep in mind that this means paying more in interest overall.
For example, if you were to take out a capital repayment mortgage agreement with a 4% interest rate over 30 years, instead of the standard term length of 25 years, you could end up with monthly repayments of £1,000 with a mortgage amount of £209,500.
This table shows how you could achieve mortgage payments of £1,000 by taking your home loan out across different term lengths. An example rate of 4% was used for these figures.
|
Mortgage Amount |
Term Length |
Monthly Repayments |
|
£98,800 |
10 years |
£1,000 |
|
£135,200 |
15 years |
£1,000 |
|
£165,000 |
20 years |
£1,000 |
|
£189,500 |
25 years |
£1,000 |
|
£209,500 |
30 years |
£1,000 |
|
£225,800 |
35 years |
£1,000 |
|
£239,300 |
40 years |
£1,000 |
The above examples are for a capital repayment mortgages
Mortgage type
The type of mortgage you choose will have a bearing on how far your £1,000 per month budget will stretch. Fixed-rate mortgages and tracker mortgages have their own set interest rates, with 5-year fixes having some of the lowest rates under the current market conditions.
The mortgage’s repayment type will also impact the amount of mortgage you can afford. Interest-only is the main alternative to capital repayment, and if you choose this option, your monthly payments will be lower as you will only have interest to pay each month.
For example, you could achieve monthly mortgage payments of £1,000 by taking out an interest-only mortgage of £300,000 with a 25 year term and 4% interest rate.
The table below shows how you can achieve £1,000 monthly mortgage payments by taking out a home loan of different amounts on an interest-only basis. A term length of 25 years has been used for example purposes, along with a range of different interest rates.
|
Mortgage Amount |
Interest Rate |
Monthly Repayments (Interest-Only) |
|
£343,000 |
3.5% |
£1,000 |
|
£300,000 |
4% |
£1,000 |
|
£266,600 |
4.5% |
£1,000 |
|
£240,000 |
5% |
£1,000 |
|
£209,500 |
5.5% |
£1,000 |
|
£200,000 |
6% |
£1,000 |
How to calculate the exact amount you can borrow
You may have worked out that you can afford a mortgage with repayments of £1,000 per month, but this isn’t how mortgage affordability actually works.
Most mortgage lenders will calculate your maximum borrowing by multiplying your annual salary by 4.5, some will stretch to 5 times salary and a minority even higher than this.
You can use our calculator below to work out how much you can borrow based on this:
What to do after running your calculations
Now that you have an idea of how much you can borrow and how far your budget of £1k per month for mortgage payments will go, you can take the next steps on your journey with us.
On Teito, you can compare the latest mortgage rates from more than 90 lenders for free and access expert advice from our whole-of-market mortgage brokers.
Here are just some of the reasons people choose us for their mortgage needs:
- You can access the latest mortgage rates in seconds
- Our brokers have access to exclusive deals
- We are 5-star rated on leading review websites
- You can secure an agreement in principle in minutes
Ready to compare the latest mortgage rates and take advantage of a free, no-obligation chat with a whole-of-market broker? Get started here.
FAQs
This question is obviously relative to the amount you earn and your outgoings but the mortgage approximate amount it would equate to under current market conditions - £189,500 - would be considered close to the national average in the UK right now.
If you are concerned that spending £1k per month on your mortgage payments might be overstretching, work out your mortgage-to-salary ratio. If your mortgage payments are more than 30-40% of your post-tax earnings, there is a chance that they are too high.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.