This guide gives you all the information you need to know including how much deposit you’ll need, the minimum income required by lenders and the process of applying for a mortgage for 100k.
How much income do I need to get a mortgage for £100,000?
If you’re applying for a sole mortgage and you need to borrow £100,000, your lender will need to see proof of your affordability to determine whether they can take the risk of lending to you.
Every lender has their own rules when it comes to deciding what makes a good borrower and therefore who they’ll lend to and under what conditions.
Most borrowers will look at a variety of factors including your:
Age - older borrowers can be seen as higher risk and may be given shorter mortgage terms
How long you’ve been in your job for
The type of employment you have i.e. whether you’re in a secure contract or are recently self-employed or on furlough
The hours you work i.e. part time or full time
Your credit history
Your debt to income ratio
The cost of your outgoings including household bills, living expenses and number of financial dependants
How much do I need to earn a year to get a £100,000 mortgage on my own?
Your annual income will be a big factor when it comes to getting approved for a mortgage and most lenders calculate how much they can lend you using income multiples of 4.5 x your annual income.
The average salary in the UK in 2020 was £29,600 per year, so based on this, a typical lender could agree to lend you £133,200, depending on their criteria and therefore their appetite to lend to someone with your circumstances.
Something to be aware of is that some lenders may agree to loan higher income multiples if they feel the loan is affordable for you, though a significant income and a low debt to income ratio would likely be required for this.
Furthermore, it may also be the case that your chosen lender agrees to approve your mortgage under the agreement that they use lower income multiples to calculate your loan amount.
This could be because they have tightened their lending criteria in light of the economical effects of Coronavirus, or it could be because you have bad credit or low affordability.
Some lenders can also have minimum annual income requirements too, however, if a lender did agree to lend you 4 x your annual income and you earned £25,000 a year, it could be possible to get a mortgage for £100,000.
Can I get a joint mortgage for £100,000?
If you’re getting a joint mortgage, either with a family member, partner or friend, it is common, and therefore possible, to use both of your incomes on the mortgage application. This could allow you to meet affordability criteria for lower interest loans, borrow more and potentially access loans with a higher-loan-to-value.
How much deposit do I need for a £100,000 mortgage in the UK?
Lenders all vary but most are currently asking for 15% to 20% of the market value of a property.
For a home worth £115,000, a 15% deposit would be £17,250, which would mean that you could get a mortgage for £100,000 and have £2,250 left over for decorating the property.
However, in some circumstances with low affordability or bad credit, it may be the case that a lender only agrees to a lower LTV rate and therefore asks you for a higher deposit.
If for example, a lender wanted a deposit of 25% of the property value and you wanted to buy that same house valued at £115,000, you would need £28.750.
A benefit of this is that you would be borrowing less as with the larger deposit, you would only need finance for £86,250.
How does the amount of debt I have affect my application?
Debt to income ratio is calculated by adding up your monthly debt repayments and then dividing them by your monthly income. A high DTI ratio indicates low affordability so it can be more difficult finding a lender willing to approve a mortgage with the most desirable terms.
The good news is that there are specialist lenders who are more familiar with lending to applicants with debt and they can be more open to approving an application if their other criteria is met.
Working with a mortgage broker can help to find these lenders quickly, without the hassle of searching multiple comparison sites.
Can a broker help me get approved for a £100k mortgage?
A mortgage expert can also negotiate the terms of your mortgage and use their experience to prevent you from making mistakes on your application that could hinder your finances later down the line.
Checking the terms and conditions of contracts is just one of the many tasks that our brokers manage as they can also compare hundreds of UK lenders, highlighting the ones that have the most favourable rates and are more likely to approve you.
Contact a mortgage broker about a £100k mortgage
Our team is on hand to answer your questions about how to get a mortgage for £100,000 or any other amount that you're curious about. You’re welcome to use our mortgage calculator for a quick quote but talking to our team is the best way to get a quote that most accurately reflects your circumstances. Call 023 8023 5555 or use our contact form to let us know about your plans to buy a property.