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A mortgage of £120,000 is not considered large but you should do your preparations before applying for one. Here you will learn how to work out what the repayments will be on a mortgage of this size and how to get the best deal.
How much does a £120,000 mortgage cost per month?
A mortgage of £120k would cost you around £667 per month under current market conditions (December 2024). This figure is based on the monthly payments for a capital repayment mortgage of this amount, with a 4% interest rate and 25-year term.
If you were to take out a mortgage based on the above variables, you would repay £200,100 by the end of the term, assuming no changes are made to the agreement during this time.
Although the example we have provided is representative of the current UK market, the exact repayments on a £120k mortgage can vary depending on a range of factors, including the interest rate and term length. We explore these variables in detail in this article.
Calculate your mortgage repayments
You can use our calculator below to work out the repayments on a £120k mortgage. This tool has been set up to automatically return results for a mortgage of this size by default, but the amount can be manually changed along with the rate, term and repayment type.
Now that you have run some calculations you can compare the latest mortgage rates for free on Teito or speak to one of our brokers for expert advice - get started here.
Factors that affect your mortgage repayments
The exact monthly repayments for a £120k mortgage will depend on the following factors:
- Interest rate: The rate you qualify for will depend on the loan-to-value (LTV) ratio and overall strength of your application. Specific mortgage product types, such as fixed and tracker rate agreements, tend to have their own specific interest rates.
- Term length: A £120k mortgage taken over a longer term will have smaller monthly payments but you would pay more overall due to the extra interest instalments.
- Repayment type: The main two options here are capital repayment and interest-only. If you choose the latter, your repayments will be lower but you will still be left with the full mortgage debt to pay at the end of the arrangement.
We will now explore how each of these variables will influence the cost of a £120,000k mortgage in depth, with example calculations to provide context.
Interest rate
The table below shows example repayment calculations for a £120k mortgage based on various interest rates, taken on a capital repayment basis over 25 years.
|
Mortgage Amount |
Interest Rate |
Monthly Repayments |
Overall Repayment |
|
£120k |
3.5% |
£601 |
£180,224 |
|
£120k |
4% |
£633 |
£190,021 |
|
£120k |
4.5% |
£667 |
£200,100 |
|
£120k |
5% |
£702 |
£210,452 |
|
£120k |
5.5% |
£737 |
£221,071 |
|
£120k |
6% |
£773 |
£231,949 |
Term length
The table below shows how the cost of a £120k mortgage can vary across different term lengths. These calculations are for a capital repayment mortgage with a 4% rate.
|
Mortgage Amount |
Term Length |
Monthly Repayments |
Overall Repayment |
|
£120k |
10 years |
£1,215 |
£145,793 |
|
£120k |
15 years |
£888 |
£159,773 |
|
£120k |
20 years |
£727 |
£174,522 |
|
£120k |
25 years |
£633 |
£190,021 |
|
£120k |
30 years |
£573 |
£206,243 |
|
£120k |
35 years |
£531 |
£223,158 |
|
£120k |
40 years |
£502 |
£240,733 |
Repayment type
The above tables are for a capital repayment mortgage. If you are taking out a £120,000 interest-only mortgage, see the table below for example calculations for this repayment type based on various different interest rates and a term length of 25 years.
|
Mortgage Amount |
Interest Rate |
Interest-only Payments (Monthly) |
Overall Repayment |
|
£120k |
3.5% |
£350 |
£225,000 |
|
£120k |
4% |
£400 |
£240,000 |
|
£120k |
4.5% |
£450 |
£255,000 |
|
£120k |
5% |
£500 |
£270,000 |
|
£120k |
5.5% |
£550 |
£285,000 |
|
£120k |
6% |
£600 |
£300,000 |
Other mortgage amounts
The table below shows how the repayments on a £120k mortgage compare to mortgages of similar amounts within the same ballpark. These figures are based on a capital repayment agreement of this amount, taken over 25 years with an interest rate of 4%.
|
Mortgage Amount |
Monthly Repayments |
Overall Repayments |
|
£118k |
£623 |
£186,854 |
|
£119k |
£628 |
£188,438 |
|
£120k |
£633 |
£190,021 |
|
£121k |
£639 |
£191,605 |
|
£122k |
£644 |
£193,188 |
|
£123k |
£649 |
£194,772 |
Calculations all done? Here are your options now...
Other costs and fees
Your monthly mortgage payments aren’t the only cost that comes with a £120,000 mortgage. You should also factor in the additional fees below when working out your budget:
- Product fees: Can range between nothing and £2,000. Fee-free deals often come with higher rates, but the fee itself can sometimes be added to the mortgage.
- Valuation fee: Some lenders will expect you to foot the cost of having the property you’re buying valued, and this can set you back between £250-1,500.
- Legal fees: Can range from a few hundred to several thousand pounds.
- Stamp duty: You can find out exactly how much your bill will be in our stamp duty guide.
- Admin costs: This includes the booking fee, telegraphic transfer fee and the account fee. All in all, admin costs for a mortgage application can cost around £1,000.
Tips for reducing your mortgage costs
You can potentially keep the repayments on a £120k mortgage to a minimum by bearing the tips below in mind:
- Put down a larger deposit: Not only would you need to borrow less, putting down extra deposit can reduce the loan-to-value (LTV) ratio and help you qualify for a lower rate.
- Improve your credit situation: Waiting for any bad credit to disappear from your credit files, paying off debts you’re in a position to clear, and paying any existing bills and credit agreements on time ahead of your application can also help you land a lower rate.
- Consider a longer mortgage term: This will reduce your monthly payments in the short term (on a capital repayment agreement), but you will be paying more in interest overall.
- Consider interest-only: Interest-only mortgages have lower monthly payments but you will need a repayment vehicle to settle the debt at the end of the term. Be sure to seek professional advice from a qualified mortgage broker before choosing this option.
Apply for a £120,000 mortgage today
Now that you have run some calculations, you can compare the latest mortgage rates for free on Teito and access independent advice from our broker, if you need some help.
Here are just some of the reasons people choose us for their mortgage needs:
- You can access the latest mortgage rates in seconds
- Exclusive rates and deals are available
- We are 5-star rated on leading review websites
- You could secure a £120k mortgage in principle in minutes
Ready to compare rates for free and take advantage of a free, no-obligation chat with a broker who specialises in £120k mortgages? Get started here.
FAQs
You would need a combined household income of around £26,670 to secure a mortgage of £120,000. This is because most UK lenders will let you borrow up to 4.5 times your annual salary, provided you are eligible for mortgage approval.
If you don’t have this amount of income, a smaller number of lenders might consider you for a 5-times salary or a 6-times salary mortgage, under the right circumstances.
There are also lenders who will consider letting you declare supplemental income, such as benefits and freelance work, alongside your main salary to boost your affordability.
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.