£120,000 Mortgage: Monthly Repayments, Income Needed & How to Qualify

If you’re planning to borrow £120,000 to buy a property, you may be wondering what the repayments look like, how much income you need, and what lenders check during affordability assessments. A £120000 mortgage is a common borrowing level in many parts of the UK, and qualification depends on income, credit history, outgoings and deposit size.

This guide explains the typical monthly repayments, how lenders decide whether you can afford the loan, and what can help strengthen your application. This article provides general information only and does not offer regulated mortgage advice.

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Monthly Repayments on a £120,000 Mortgage

Repayments depend on your mortgage term and interest rate. Below are example repayment amounts on a capital repayment mortgage.

Repayments at 4% Interest

Term	Monthly Repayment
25 years	~£633
30 years	~£573
35 years	~£536

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Repayments at 5% Interest

Term	Monthly Repayment
25 years	~£702
30 years	~£644
35 years	~£607

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Repayments at 6% Interest

Term	Monthly Repayment
25 years	~£773
30 years	~£720
35 years	~£680

These are examples only. Actual rates vary by lender, credit profile, deposit size and product type.

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What Income Do You Need for a £120,000 Mortgage?

Lenders typically use an affordability multiplier between 4 and 4.5 times income, though this varies depending on circumstances.

Income Needed at 4× Income

£120,000 ÷ 4 = £30,000 gross annual income

Income Needed at 4.5× Income

£120,000 ÷ 4.5 = £26,666 gross annual income

If applying jointly

Combined income must meet the above thresholds.

However, income multiples are not guaranteed. Lenders also assess:

• Monthly outgoings
• Loan and credit commitments
• Credit history
• Deposit size
• Type of employment
• Regularity of income

Some lenders may offer up to 5× or even 5.5× income for strong applicants, often with strict criteria.

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How Your Deposit Affects Eligibility

Deposit size plays a major role in how easily you can qualify.

5% Deposit (95% LTV)

• Suitable for strong credit profiles
• Higher interest rates
• Strict affordability tests

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10% Deposit (90% LTV)

• Wider lender choice
• Lower rates
• More flexibility on income and credit history

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15%+ Deposit (85% LTV or lower)

• Ideal for applicants with mild historic credit issues
• Strong affordability outcomes
• Easier approval

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What Lenders Look at When Assessing Your Application

A lender assesses more than just your income. Key areas include:

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1. Credit History

Lenders check:

• Payment reliability
• Defaults or CCJs
• Recent missed payments
• Credit utilisation
• Number of open accounts

Clean recent conduct can outweigh older issues.

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2. Employment Type and Stability

Lenders consider:

Employed applicants:

• Length of employment
• Contract type
• Bonus/commission reliability

Self-employed applicants:

• 1–3 years of accounts
• Profit consistency
• Sustainability of income

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3. Outgoings and Existing Credit

Regular outgoings reduce borrowing capacity.

Lenders analyse:

• Loans and credit cards
• Car finance
• Childcare costs
• Student loans
• Household bills

Even with a high income, heavy commitments can reduce affordability.

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4. Bank Statement Conduct

A critical part of modern underwriting.

Lenders review:

• Overdraft behaviour
• Returned direct debits
• Gambling transactions
• Cash withdrawals
• Regular spending habits

Strong conduct helps demonstrate financial stability.

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5. Deposit Source

Lenders check whether the deposit is from:

• Savings
• Gifted funds
• Equity from a sale
• Concessionary price
• Inheritance

Gifted deposits usually require a signed declaration.

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Can You Get a £120,000 Mortgage With Bad Credit?

Yes, depending on:

• How old the adverse credit is
• Whether debts were settled
• Severity and frequency of missed payments
• Deposit size

Typical outcomes:

Mild adverse (older than 2–3 years):
Often accepted with 10%+ deposit.

Recent adverse credit:
Specialist lenders may consider; larger deposit needed (15–25%).

Multiple historic issues:
Deposit size and strong recent conduct are key.

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How to Improve Your Chances of Qualifying

(General Information Only)

1. Reduce Credit Utilisation

Low balances improve credit scoring and affordability.

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2. Avoid New Credit Applications

Lenders prefer a stable profile leading up to a mortgage application.

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3. Improve Bank Statement Conduct

For at least 3 months:

• No unarranged overdrafts
• Avoid returned payments
• Moderate discretionary spending

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4. Check All Credit Files

Equifax, Experian and TransUnion reports may differ.
Correcting errors can improve your profile quickly.

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5. Increase Your Deposit if Possible

Even an extra 5% deposit can unlock better rates and lender options.

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6. Prepare Income Evidence Early

This includes:

• Payslips
• P60
• Employment contracts
• Self-employed accounts

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Example Buyer Scenarios

Scenario 1: First-time buyer earning £32,000 with clean credit

Likely qualifies for £120,000 with 5–10% deposit options.

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Scenario 2: Joint application earning £15,000 + £14,000

Combined income ~£29,000
Feasible with lenders offering 4–4.5× income.

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Scenario 3: Applicant with older settled defaults

Lenders may support at 10–15% deposit.

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Scenario 4: Self-employed with variable income

Depends on average profit and sustainability, but possible with strong documentation.

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Summary

A £120000 mortgage is achievable for many buyers, with monthly repayments depending on rate and term, and income requirements typically falling between £26,666 and £30,000 depending on lender multiples. Approval also depends on:

• Deposit strength
• Credit profile
• Income stability
• Affordability assessments
• Bank statement conduct

With careful preparation and understanding of lender criteria, many applicants successfully qualify for this level of borrowing.

This article provides general information only. For individual guidance tailored to your financial circumstances, regulated mortgage advice is required.