Although the UK has entered a second lockdown, property markets in England, Scotland, Wales and Northern Ireland are still open, meaning that estate agents are still able to conduct house viewings in person, and buyers and renters are able to move home.
But getting onto the property ladder is no mean feat at the best of times; according to the UK House Price Index, the average cost of a home in England is now £261,795 and exceeds £496k in the capital. It’s no wonder people are seeking a mortgage in excess of £270k.
If you’re keen to secure a £270,000 mortgage and want to get the ball rolling in 2021, your best bet is to work with an experienced broker. Due to the pandemic lender requirements are stricter than ever, and knowing where to look and how to approach the process is key.
What factors affect my eligibility for a £270,000 mortgage?
There are a number of factors that affect whether or not a mortgage provider is willing to lend to you, and even the smallest detail can have a huge impact.
Some of the most common factors that can impact your eligibility include:
Your income and outgoings.
How much deposit you have.
You credit history.
What type of job you have.
How old you are - many lenders cap the term length or how much can be borrowed if you’re over 60.
The type of property you want to buy - due to the associated risk a higher deposit is usually required for buy-to-lets and commercial properties, and some lenders are wary of lending on non-standard construction types.
At The Mortgage Hut, we’re dedicated to matching you with deals that have the most suitable and affordable terms for your circumstances. Get in touch for advice from an experienced broker with access to over 100 UK banks and specialist lenders.
How much do I need to earn to get a mortgage of £270,000?
While affordability rules vary by lender, most allow their borrowers to apply for mortgages up to 4.5x their annual salary or annual income for self-employed or contract workers. This means that, as a single applicant you will need to earn a minimum of £60k a year.
If that sounds unrealistic, don’t panic - we know that many applicants seeking larger mortgages are looking for a joint mortgage. This means that your combined income can be included on your application and taken into consideration by providers.
However, evidence of income alone isn’t enough to satisfy; if you want to borrow a hefty sum, you need to be able to prove that your disposable income can comfortably cover your £270k repayments alongside your other outgoings.
Mortgage providers will scrutinise your accounts, and will check your true affordability by calculating your debt-to-income (DTI) ratio. This is calculated by dividing your fixed monthly expenses by your income and timesing it by 100. A DTI of 35% and above is generally seen as good affordability.
This in mind, it’s important that you avoid applying for or making purchases on credit in the months leading up to, and during, a property purchase. Make sure to keep a close eye on your outgoings - is there anything you can cut back or pay off early to help boost your affordability?
Can I get a £270k mortgage if I’m self-employed?
If you’re self-employed or a contractor with an inconsistent income, mortgage providers may be more skeptical about lending to you.
That being said, as long as your monthly take-home is always sufficient to cover your repayments plus outgoings, there’s no reason you shouldn’t be considered - but you will be expected to provide evidence.
Be sure to prepare your tax records ahead of applying for a mortgage. Most lenders will want to see SA302 forms and a minimum of two - three years’ certified accounts and HMRC tax year overviews.
While it can be more difficult to get a mortgage if you’re your own boss, there are a number of lenders on the market who provide competitive mortgage deals specifically for the self-employed.
How to find them? Our brokers have extensive, up-to-date knowledge of the mortgage landscape, and can point you in the direction of lenders with terms most suitable for you and your circumstances - get in touch.
Can I get a mortgage of £270k in the UK with 5% deposit?
The number of UK lenders offering a 5% deposit mortgages is low - although the Prime Minister has recently outlined plans for a new scheme to increase the number of residential mortgages available at 95% loan-to-value.
As it stands there are few options when it comes to 5% deposit mortgages, and the scarcity means that the terms of lenders that do are strict - they may require a spotless credit rating and high income and affordability, which isn’t always realistic.
What’s more, you are unlikely to get the most competitive deal with a 5% deposit, so if you can afford to put down more, then do. A higher deposit will open you up to a wider range of lenders and therefore more favourable deals.
A deposit of 15% - 20% of a property’s value is the standard requirement for residential mortgages in 2020 - although 90% LTV options are not unheard of.
If you’re looking for a buy-to-let or commercial mortgage, deposit requirements tend to be higher still, as repayments are dependent on rental income from tenants and therefore classified as higher risk by lenders - think in the vicinity of 25% - 40%.
Here’s a rough idea of deposit requirement variations based on product:
Type of mortgage product | Deposit amount (%) | Deposit amount (GBP) |
Residential £270,000 mortgage | 5% | £13,500 |
10% | £27,000 | |
15% | £40,500 | |
20% | £54,000 | |
Buy-to-let / commercial £270,000 mortgage | 25% | £67,500 |
30% | £81,000 | |
35% | £94,500 | |
40% | £108,000 |
Of course, this is only a guide; no lender has exactly the same expectations and your mortgage terms will be very much dependent on your circumstances. Always check with a broker to find the best deal and avoid getting an application rejected.
I have bad credit: can I get a £270,000 mortgage?
As established, every lender has different criteria when establishing mortgage eligibility. Some providers will only accept those with spotless credit history. Others may make a decision based on how long ago the instance occurred and / or the severity of the issue.
If you have one of the more severe forms of bad credit on your file, such as a CCJ, IVA or bankruptcy, you may find it particularly difficult to find a suitable provider - especially if your affordability isn’t the best or you have a small deposit.
If you fall into this category, it’s even more paramount that you seek assistance from a broker.
Our experienced advisors can tell you where to find lenders most likely to provide bad credit mortgages, and they could prevent you from receiving an application rejection - something you’ll want to avoid as this can further negatively impact your credit score.
Check your eligibility with a broker
To find out whether you’re eligible for a £270,000 home loan, why not ask a broker to compare your options and check on your behalf? It’s quick, free and won’t damage your credit file.
Alternatively, if you have any questions or require help with a mortgage application, speak to a member of our team for advice. Call us today on 02380 980304 or submit a request here.
