Property prices are predicted to fall in 2021, so first-time buyers and investors alike have been searching the UK market for affordable properties worth £170,000.
But what do mortgage lenders deem as an affordable mortgage when it comes to deciding whether or not they’ll loan you the money?
Am I eligible for a 170k mortgage?
Although mortgage calculators can be handy for quick glances as to how much you can borrow, to truly understand whether you’ll be eligible for a 170k mortgage, ask a broker.
They’ll assess your financial situation, considering a whole host of factors to determine if you’d meet the eligibility criteria for your chosen lender.
Knowing this before applying for a mortgage can prevent you from accidentally applying to an inappropriate lender and getting rejected.
If you were to get rejected for a mortgage worth 170k or any other amount, it could appear on your credit history and other lenders can use this information when making their decision.
What affects my eligibility for a £170,000 mortgage?
If you decide to proceed with a mortgage application, your lender will likely look at the below factors to make their decision about your affordability and therefore your eligibility for their mortgage terms:
Your employment, including how long you’ve worked
Your income vs outgoings
Your credit history
Your age
The type of property you want to buy
Can I get a mortgage for 170k with bad credit?
The good news is that even applicants with bad credit may still meet eligibility criteria of some UK lenders as each one has varying rules about what they deem as bad credit.
Usually, the more recent and more severe the credit issue, the lower the chance of approval but that’s not necessarily always the case.
Some lenders are more likely to approve mortgages for people with bad credit because they look at other factors such as how much deposit you have or how high your income is, to make their decision.
Our brokers can advise you on how to improve your credit score but they can also highlight suitable lenders and manage your application to avoid delays if necessary.
How much do I need to earn for a £170,000 UK mortgage?
All lenders have their own rules about how much income is needed to prove affordability for a loan worth £170,000.
Some lenders in the UK use income multiples, starting from 4.5 ranging all the way up to 6 in a handful of circumstances.
A lot of lenders calculate how much they’ll lend you using an income multiple of 4.5, so for a mortgage worth £170,000, you would need a minimum income of £37,777 a year.
Income really isn’t the only factor that lenders will consider, so even if your income is lower than this, it may still be possible to get approved for a mortgage this size, so ask a broker who can advise you after learning more about your situation.
How do I provide evidence of my income for a £170k mortgage?
Depending on whether you’re employed or self employed, your lender will likely ask for evidence of your income in the form of:
Bank statements
Pay slips
Tax returns
Can I get a mortgage for £170k if I’m self employed?
It may well be possible to get a mortgage whether you’re freelancing or a contractor, though most lenders for self employed mortgages will want to feel confident that you meet their affordability requirements.
You may need to provide evidence that your income is both regular and substantial enough to repay your mortgage, as well as any other expenses that you are committed to.
To assess whether or not you can afford a loan of 170k, lenders will ask for:
Two or more years' certified accounts
SA302 forms
A tax year overview (from HMRC) for the past two or three years
Working with a mortgage broker can help you prepare for a mortgage application because they’ll check your eligibility and only recommend lenders that are suitable.
This can save you a lot of wasted time and could also save you money as our brokers compare interest rates for self employed mortgages too.
How much deposit do I need to buy a £170,000 house?
Finding a lender who is willing to provide 90% loan-to-value ratios can be difficult if you have credit issues or low affordability but that’s not to say that it’s impossible.
Most residential mortgage lenders in the UK are currently asking their borrowers for deposits up to 30%, though the amount of deposit you’ll need to have will vary depending on lots of factors.
If you’re able to save a larger deposit, you could own more equity in the property upfront, which some lenders look favourably on as this reduces the loan-to-value ratio.
That’s why in some circumstances, having a bigger deposit can sometimes help you to access a wider range of lenders and therefore, better rates.
See the table below to learn more about how your deposit size can lower the amount you have to borrow.
Property value | Deposit size as a percentage | Deposit size in GBP | Mortgage amount | LTV ratio |
£170,000 | 5% | £8,500 | £161,500 | 95% |
£170,000 | 10% | £17,000 | £153,000 | 90% |
£170,000 | 15% | £25,500 | £144,500 | 85% |
£170,000 | 20% | £34,000 | £136,000 | 80% |
£170,000 | 25% | £42,500 | £127,500 | 75% |
Can I get a BTL mortgage for £170,000?
Some buy-to-let mortgage lenders can place great focus on the borrower’s ability to buy a property that is a good investment, so keep in mind that your chosen lender may ask you how you plan to find tenants, pay for the mortgage in the event that you are unable to secure tenants and furthermore, they may ask you what your exit plan is.
Although there are some lenders who may allow you to use other property as security for your loan, many lenders may also ask for larger deposits up to 40%.
For a mortgage worth £170,000, a 40% deposit would equate to £68,000. If you’re curious about how much deposit you might need for a 170k mortgage based on your circumstances, ask a broker here.
Alternatively, call us and we’ll put you in touch with an expert who can listen to what you need and therefore advise you on which mortgage terms could be best for
