If you’ve ever been to the capital, then you’ll know that there are plenty of high-end homes, some for sale or to let, and some not. But what how much does it actually cost to fund a prime London property?

Mortgage broker, Henry Dannell, has taken the liberty of doing research to reveal the cost of securing a property purchase across the UK’s very top tier of the market – with a monthly repayment of almost £18,000 – it’s eye-watering, to say the least.

Recently, the Bank of England made the decision to raise interest rates by 0.5%, which has been the most considerable leap since 1995, and the sixth consecutive increase since December of last year.

This seemingly minor change, however, aggravates most homeowners, since it means their monthly repayments are likely to increase further. Yet, how does the cost paid by the average UK homeowner compare to those at the very top of the property ladder?

A noteworthy, yet concerning comparison

The results by Henry Dannell show that, based on the current UK average house price of £283,496, a 25% deposit (£70,874) and a three-year fixed mortgage, at a rate of 2.9%, the average homeowner requires an income of £47,249 in order to secure a mortgage based on a 4.5-time income multiple.

Once approved, they will pay £1,005 in monthly mortgage repayments, with the total cost of their loan hitting £301,489 over the lifetime of the mortgage, thus equating to £88,867 paid in interest.  

Director of Henry Dannell, Geoff Garrett, commented: “It’s fair to say that we’ve enjoyed one of the most sustained periods of affordability in living memory with regard to borrowing, but a sixth consecutive base rate hike will continue to dampen our ability to borrow for a relatively low cost.”

“This means the cost of borrowing in order to buy will start to climb, regardless of whether you’re doing so at the average UK price threshold, or at £5m and above.”

“Of course, for those already paying almost £18,000 per month to repay their mortgage, any increase is going to be far more notable in a pounds and pence sense.”

A mortgage fit for the Capital

To secure a mortgage in London as a whole, the required income climbs to £87,697 on the current London house price of £526,183 – once a deposit of £131,546 has been placed, of course.

However, in the prime London market, a £5 million property purchase would command a 25% deposit to the tune of £1.25 million.

The average income required to secure a mortgage is still £833,333 per year once this deposit has been placed.

What about the monthly cost of repaying a mortgage on a £5 million home? £17,724 per month, and not only that but an additional total of over £5.3 million paid over 25 years –  £1.6 million of that coming in interest alone.