If you’re wondering if you’re eligible for a £130,000 mortgage, it’s best to ask an expert who can calculate your affordability on your behalf but we understand that it’s important for you to know what affects the likelihood of approval and what you can do to help yourself.
This guide explains how much deposit you might need for a 130k mortgage as well as how bad credit and the type of mortgage you’re applying for, can affect the amount of deposit that a lender can require you to put down.
How does my income affect a mortgage for £130,000?
If you’re applying for a 130k mortgage on your own, your lender will need to see proof, in the form of bank statements, pay slips or tax returns, that you can afford your mortgage as well as:
Household bills
Any debts you have including credit cards or car finance payments
Other outgoings such as travel costs or childcare costs
Repairs and maintenance of the property
Most lenders will look closely at the above factors to determine your affordability for the mortgage you’re applying for and they will likely stress Test your income.
This essentially means that they’ll look at your income and outgoings and then calculate how much your ability to repay your mortgage could be affected in the event of financial difficulty.
Your lender might also ask you questions about how long you’ve been in employment for and in some cases where employment has only been for a short period, they might ask you for a copy of your employment contract.
What other factors do lenders look at on a mortgage for 130k?
There are hundreds of lenders in the UK and they all have different criteria that they use to decide if they can lend £130,000. Most but not all, will also look at the below factors when making their decision:
Age - older borrowers can be seen as higher risk and may be given shorter mortgage terms
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
The amount of debt you have
The cost of your outgoings
The type of property you’re buying - some structures or building materials can be expensive to repair and maintain, so lenders will want to check you can afford them.
Because there are so many lenders with such varying rules, the good news is that even if you’ve been rejected for a 130k mortgage with one lender, it doesn’t necessarily mean that a different one will take the same approach.
Getting approval for any type mortgage is reliant on knowing what you’re eligible for and where the relevant lenders are. That’s where mortgage brokers come in as it’s their job to check eligibility, source the right lenders and advise on how to improve your application.
How much do I need to earn for a £130,000 UK mortgage?
Every lender will likely have a different set of rules that they follow when deciding how much they can lend to you although the majority use income multiples.
Most lenders provide mortgages of up to 4.5 x an annual salary, though some might consider loaning up to 5.5 x a salary if you have high affordability and a “good” credit history.
If a lender decided to use an income multiple of 4.5 to calculate your borrowing potential, you would need a minimum salary of £28,888 to qualify for a £130,000 mortgage.
Of course, you’ll also need to meet your chosen lender’s other criteria, so to truly know how much you can borrow, ask one of our brokers to find relevant lenders, calculate on your behalf and compare.
Can I get a mortgage for £130k if I’m self-employed?
It may be possible to get a mortgage as a self-employed borrower, if you’re able to prove you have sufficient income. To calculate the risk of you defaulting on your mortgage, lenders may ask you to provide three years of accounts, although there are lenders who accept less.
As well as how much you earn, lenders will also be concerned with the regularity of your income, so if you have big gaps which indicate no work or dips in income, lenders may feel that your income is too unpredictable.
Getting a mortgage for 130k could be perfectly feasible as a self-employed or contract worker, it’s usually just a case of proving to the lender that you can afford to repay the debt.
Can I get a joint mortgage for £130,000?
If you were to apply for a joint mortgage, it could be possible to include both of your incomes on the application, which boosts the amount you can borrow with most lenders.
Of course, if one of you has bad credit or affordability issues, that can sometimes hinder an application but that really depends on your circumstances as a whole and how recent and severe the credit issues are.
A combined income can, in some circumstances, allow you to access better interest rates too which can help you to pay less for your mortgage in the long run.
That’s because the risk of you defaulting on your mortgage with two incomes could be seen as less likely and so lenders may feel more comfortable to lend to you at their cheapest rates.
How much deposit do I need to buy a £130,000 house?
In exceptional circumstances, lower deposits of 5 - 10% could be achievable, though currently, the majority of lenders are asking their borrowers to put down 15 - 20% of the properties market value.
The table below shows the relationship between deposit size and mortgage amount for a property with a market value of £130,000.
Property value. | Deposit size as a percentage. | Deposit size in GBP | Mortgage amount | LTV ratio |
£130,000 | 5% | £6,500 | £123,500 | 95% |
£130,000 | 10% | £13,000 | £117,000 | 90% |
£130,000 | 15% | £19,500 | £110,500 | 85% |
£130,000 | 20% | £26,000 | £104,000 | 80% |
£130,000 | 25% | £32,500 | £97,5000 | 75% |
Although higher deposits can take longer to save, if you’re able to do so, it could help you to again access better rates. Understandably, this isn’t always manageable but the good news is that there may be lenders willing to provide a mortgage for 130k with deposit requirements that are more affordable.
Where can I find the best mortgage deal for a 130k mortgage?
Working with a mortgage broker can be a great place to start as they can use their knowledge and access to the market to find you lenders that are more likely to accept you.
They do this by listening to what you need from a mortgage and then looking at your circumstances to find lenders who approve loans for borrowers similar to you.
Once they have a selection of relevant lenders, they’ll explain the pros and cons of each agreement so that you can make an informed decision about whether or not you want to apply.
If you’re happy to proceed, they’ll check your eligibility without affecting your credit report and then guide you through the application process, to help you avoid any mistakes that could result in the application being rejected.
Can I get a BTL mortgage for £130,000?
A buy-to-let lender will look at the common factors as they would if they were assessing you for residential factors, including your age, income, credit history and so forth. A big difference is that a BTL mortgage lender will also want to consider the viability of the investment.
BTL mortgages can be seen as riskier from a lender’s perspective, perhaps because the repayments are often reliant on the borrower finding tenants and collecting rent. Because of the perceived higher risk, some lenders can ask for higher deposits in comparison to a residential mortgage.
Some lenders can ask for 40% deposits, which means that if the property you wanted to buy was worth £130,000, you could need a £52,000 deposit.
Applicants with a good credit history and high affordability are likely to have a wider range of lenders to choose from, so ask our brokers to check your eligibility for these so you can avoid applying to the wrong lenders.
Contact a mortgage broker about a £130k mortgage
Buying a property for 130k is a big decision so always take your time and consider the pros and cons of a mortgage, with the help of an expert if possible.
Our advisors can take the time to scour the market and compare the lenders who could offer you the most attractive deals.
Call 02380 980304, use our contact form or alternatively, use our mortgage calculator to learn more about how much you could borrow.
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