If you’re looking to invest in a property and have estimated that you’ll need a mortgage in the realm of £180k, you’ve come to the right place.
Property sites Rightmove and Zoopla report that August 2020 has been the busiest month for sales in 10 years, with more properties being put on the market, and applications completing faster than ever.
Now presents a great time to buy, so whether you’re a first-time buyer, after a second home or looking buy-to-let investment, read on.
Am I eligible for a £180k mortgage?
Mortgage eligibility is very much dependent on a number of factors, and as most UK lenders work to different criteria it’s difficult to pre-empt whether or not you’ll be approved without the industry know-how.
A good starting point is to input your details into a mortgage calculator; this will give you a rough estimation as to how much you could borrow, based on your total gross income and amount of deposit you have available.
But for a more accurate reflection of which lenders will approve your application, we recommend working with a broker. After assessing your individual circumstances, our industry experts know exactly where to look for the most suitable and financially viable lenders.
What factors could affect my eligibility for a £180,000 mortgage?
It’s important to note that there are many variables that can affect your mortgage eligibility. The majority of UK lenders will consider the following alongside the financial factors:
Job type - contractors or the self-employed are typically seen as higher risk borrowers and lenders may need additional affordability assurance.
Age - over 60s may be capped on how much they can borrow or given shorter mortgage terms.
Property type - some lenders are wary of lending on non-standard construction types (i.e. those not brick walled and tile roofed) as they can pose a higher risk.
Bad credit history - options may be limited if you have adverse credit, although some forms carry more weight than others.
Buy-to-let properties - BTLs are typically seen as riskier investments, and most lenders will require a far larger deposit as security.
That being said, there are a number of lenders out there who specialise in providing mortgages for all of the above, so even if you’ve been rejected for a £180k home loan in the past, don’t give up hope.
Finding the right mortgage, with terms that work for you, depends on your ability to compare hundreds of lenders. Working with an experienced broker means they can use their expertise and accessibility to quickly identify the loans you’re most likely to be eligible for.
How much do I need to earn for a £180k mortgage?
When you apply for a mortgage, most providers cap the amount they will lend at around 4x - 4.5x your annual salary, although in some circumstances where the applicant(s) have good affordability, this may be extended to 5.5x your income.
For example, if one lender uses an income multiple of 4x and another 5.5x, to be accepted for a £180,000 mortgage you would have to have a minimum income of £45,000 and £33,000 respectively.
This table helps illustrate the concept, and will give you an indication as to how much you may be eligible to borrow based on your income with the usual lender caps in place:
Annual income | 4x income | 4.5x income | 5x income | 5.5x income |
£33,000 | £132,000 | £148,500 | £165,000 | £181,500 |
£36,000 | £144,000 | £162,000 | £180,000 | £198,000 |
£39,000 | £156,000 | £175,500 | £195,000 | £214,500 |
£42,000 | £168,000 | £189,000 | £210,000 | £231,000 |
£45,000 | £180,000 | £202,500 | £225,000 | £247,500 |
Of course, your lender will have a number of other eligibility requirements in place, so for a true indication of how much you can expect to borrow, ask one of our brokers who will consider your situation as a whole.
How does affordability affect my ability to get a mortgage of £180,000?
Although income is an important factor, lenders will of course want to know that you can afford to make mortgage repayments after the deduction of any other expenses you have, such as:
Outstanding debt, such as loans, credit cards or car financing.
Repairs and maintenance of the property.
Household bills.
Other outgoings such as travel or child care costs.
Personal spending habits.
Your affordability is determined by calculating your debt-to-income ratio, which measures your income against your monthly outgoings. The lower your DTI, the more disposable income you have, and provided this sum can comfortably accommodate a £180k mortgage, lenders will look at you more favourably.
All these factors have the potential to make or break an application, because if your income isn’t sufficient to cover your current outgoings alongside a mortgage, lenders are likely to decline you.
What deposit is required for a £180k mortgage?
While all lenders have different requirements, in the current market the majority of residential mortgage providers ask for a deposit of 15% - 20% of the property’s market value.
While there may be a handful of lenders out there who are happy with a 10% deposit (and in a few circumstances, 5%), a larger deposit can often give you access to a wider range of lenders, and therefore more competitive rates. It also means that, in most circumstances, you borrow less in the long run.
The following table illustrates the relationship between deposit size and mortgage amount for a property with a market value of £180,000:
Property value | Deposit size (%) | Deposit size (GBP) | Mortgage size | LTV ratio |
£180,000 | 5% | £9,000 | £171,000 | 95% |
£180,000 | 10% | £18,000 | £162,000 | 90% |
£180,000 | 15% | £27,000 | £53,000 | 85% |
£180,000 | 20% | £36,000 | £144,000 | 80% |
£180,000 | 25% | £45,000 | £135,000 | 75% |
Can I get a £180,000 mortgage if I have bad credit?
As already established, every lender has different criteria as to what this will and won’t accept when it comes to approving mortgage applications.
Those with severe credit issues such as CCJs, repossessions or bankruptcies can find it difficult to get a lender to approve their mortgage application, especially if there are other factors working against them - but there are always options.
A mortgage broker will have access to the UK market and can quickly identify the lenders that are more likely to approve a £180k mortgage, even in instances of bad credit.
It’s important that you avoid applying to a mortgage lender without checking your eligibility beforehand, as a rejection can further negatively impact your credit score.
Where can I find the best deal for a £180k mortgage?
If you have a lender in mind for your £180k mortgage, it’s well worth speaking to a mortgage broker who can check on your behalf before you apply. Remember, a rejected application can adversely impact your credit rating.
A broker will be able to scour the market for the most suitable deals, and may be able to suggest a more suitable or financially viable alternative, helping you save money at every opportunity.
