With £500 a month you may be eligible to get a host of mortgages but this will depend on how much mortgage deposit you have paid, the term of your mortgage and the size of your mortgage.
It is hard to say what exact mortgage you can get for £500 a month as this will depend on your mortgage affordability, the mortgage lenders product criteria, your credit score and the property.
What mortgage can you get for £500 a month?
For £500(£499.92 to be exact) a month you could be able to get a mortgage of £125,000 at 1.5% APR, a repayment term of 25 years and a total repayable of £149976.00
This will mean for your £500 a month mortgage that you will have already paid a mortgage deposit of between 5% to 20%. For £125,00 this is between £6,250 and £25,000.
You may be able to get some mortgages for £500 a month with 0% mortgage deposit and hence a 100% loan to value.
They are a certain type of mortgage known as a family springboard mortgage, they include mortgages from lenders such as the Barclays family springboard mortgage, the lloyds lend a hand mortgage or the post office family link mortgage.
Government schemes for a £500 a month mortgage
- Lifetime ISA- gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA- gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy- allows you to buy your home at a discount price.
- Preserved right to buy- same as above.
- Right to acquire- same as above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich the local councils provide the Norwich home options scheme.
Getting a mortgage can be a very difficult process if not handled with care.
If you are considering getting a mortgage for £500 a month then using a mortgage broker may be a good choice as mortgage brokers usually have access to many more products than any specific mortgage lender.
Mortgage brokers will also usually have access to specific deals from mortgage lenders as well as experience on which mortgage lenders will be more likely to accept your case. This will help you avoid getting rejected on a mortgage application and having to build credit due to the damage a rejection might do to your credit score.