How much does a £120,000 mortgage cost?

If you’re considering borrowing £120,000, the key question is usually simple: what will it cost each month?

Your repayments depend mainly on:

• the interest rate you’re offered
• the mortgage term (how long you repay it)
• whether it’s a repayment or interest-only mortgage

Below you’ll find example repayments, plus guidance on the income and deposit factors that can affect how much you can borrow.

At a glance: what a £120,000 mortgage could cost

Monthly repayments vary by term and interest rate. To give you a realistic feel for the range, here are illustrative example payments for a capital repayment mortgage (where you repay both interest and the loan over time).

Example monthly repayments (repayment mortgage)

What this shows:

• Higher interest rates increase your monthly cost.
• Longer terms usually reduce the monthly payment, but you typically pay more overall.

Note: These examples assume the interest rate stays the same for the full term. In real life, rates can change if you remortgage or move off a fixed/discounted deal.

Repayment vs interest-only: why the monthly cost can be very different

Most homebuyers choose a repayment mortgage because it clears the balance by the end of the term.

With an interest-only mortgage, your monthly payment covers interest only—the original £120,000 balance still needs to be repaid at the end (usually using a separate repayment plan).

In practice:

• interest-only can mean lower monthly payments
• but it requires a clear plan for repaying the capital later

Mortgage repayment calculator (to estimate your own figures)

You can estimate your repayments by using a mortgage repayment calculator. Enter:

• Loan amount: £120,000
• Interest rate: (your expected rate)
• Mortgage term: (e.g., 25 years)

Your output will typically show:

• estimated monthly repayment
• estimated total paid over the term
• estimated total interest

How much income do you need for a £120,000 mortgage?

In the UK, lenders commonly assess affordability using your income and outgoings.

While the exact approach varies by lender and your circumstances, many mainstream lenders may consider borrowing around 4 to 4.5 times your annual income.

A simple way to think about it

• If a lender used 4.5x, you might need around £26,667 annual income to borrow £120,000.
• If a lender used 4x, you might need around £30,000 annual income.

Important: affordability isn’t just about income. Lenders also assess your outgoings, existing credit commitments, and how much you can comfortably pay each month.

If you’re close to the limit, a joint application can sometimes increase the household income considered.

Deposit and LTV: what deposit do you need?

Your deposit requirement is usually worked out based on the property value, not the mortgage amount.

Typical minimum deposit range

For many residential mortgages, minimum deposits often fall somewhere around 5% to 10% (depending on the lender and your overall profile).

How LTV affects your options

• Lower LTV (bigger deposit) can open up more lender options.
• Lenders often reserve their most competitive pricing for borrowers with lower LTV.

Example: If you were buying a property worth £120,000 and borrowing £120,000, that would be no deposit—which is uncommon for mainstream residential lending.

Other costs to budget for (beyond the monthly repayment)

When you’re working out the true cost of a £120,000 mortgage, don’t forget the extras that can affect your monthly budget and upfront costs.

1) Mortgage fees

Some mortgages include arrangement fees and/or valuation fees. If fees are added to the loan, your monthly repayment may increase.

2) Insurance

Depending on your situation, you may consider:

• buildings insurance (often required)
• life insurance (often recommended)
• other protection products (optional)

3) Stamp duty

Stamp duty depends on the property value and whether it’s your main residence. It’s worth checking before you commit.

4) Legal and conveyancing costs

These are usually separate from the mortgage and can vary depending on the transaction.

How a mortgage broker can help with a £120,000 mortgage

If you want to understand what you can borrow and what you could pay each month, speaking to a broker can help you move from estimates to a clearer plan.

A broker can typically help you:

• model repayments based on different terms and mortgage types
• understand how your deposit and LTV may affect lender options
• assess affordability using your income and outgoings
• compare suitable deals from the market (rather than relying on one lender’s criteria)

Next steps: get your figures in one place

To estimate the cost of a £120,000 mortgage for your circumstances, gather:

• your expected interest rate range (or the deals you’re considering)
• the term you want (e.g., 25 years vs 30 years)
• your deposit and the property value
• your monthly outgoings and existing debts

Then you can compare options and decide what’s realistic for your budget.