The UK property market is booming, but it’s not accommodation in the bustling city centres people are after - demand has never been so rife for spacious countryside property with outdoor space a-plenty.
It’s therefore unsurprising that we’re receiving huge volumes of enquiries from prospective homeowners seeking large mortgages of £290k+. But with lender eligibility criteria stricter than ever, getting the right advice is key before you go ahead with an application.
As a starting point, you can try out our mortgage calculator - simply input a few income and deposit details and you’ll get an estimation as to how much you may be able to borrow. But for a true reflection of your eligibility, read on.
In a hurry? Give us a call on 02380 980304 or contact us and one of our expert advisors will be in touch.
What will lenders look at when assessing a mortgage application?
There are a huge number of factors that banks and independent mortgage providers look at when determining your eligibility, and no two lenders work to the same criteria. However, they will all be interested in information surrounding:
Your income and outgoings.
The size of your deposit.
What your credit score is / credit history looks like.
What you do for a living.
What type of mortgage you’re seeking.
When a lender receives an application for a mortgage, they will assess your answers against their criteria to see if you meet their requirements. If you’re successful, they will make you an offer with terms dependent on the level of risk you pose (i.e. how likely you are to default).
How much deposit will I need to save for a £290k mortgage?
There isn’t really a ‘standard’ deposit size, mainly because there are so many other variables that will influence how much a given lender’s decision. But in today’s market, there are very few that accept less than 15-20% of the property’s value.
And that’s just for a standard residential mortgage; some products are deemed as higher risk, so if you’re after a commercial or buy-to-let (BTL) mortgage, both of which are reliant on rental income to cover their monthly repayments, they may require extra financial security - usually in the form of a 25-40% deposit.
Understandably, lenders want to feel certain that borrowers can repay their loans on time and in full, so if your circumstances hinder this confidence, a larger deposit can sometimes help to alleviate the risk of greater loss to the lender.
That being said, the government has outlined plans to remove stress tests from applications and increase the number of 5% deposit mortgages (watch this space). Even so, if you can afford to put down a higher deposit then do - it’s likely you’ll receive offers from more lenders and therefore access to more competitive rates.
How much do I need to earn to get a mortgage of £290,000?
As we’ve established the rules do vary by lender, and affordability is no exception - but many lenders allow borrowers to apply for mortgages up to 4.5x their annual income. This means that you will need to earn just shy of £64,500 a year for a £290k home loan (or combined income if you’re applying for a joint mortgage).
However, income alone isn’t usually enough to satisfy mortgage providers - you need to be able to prove that your disposable income can comfortably cover your £290k repayments alongside your other outgoings.
To Test your true affordability, lenders will assess your accounts and spending habits to determine your debt-to-income (DTI) ratio. This is calculated by dividing your fixed monthly expenses by your income and multiplying by 100. A DTI of 35% and above is deemed ‘good affordability’.
Interested to know your DTI ratio? Contact one of our mortgage experts who can help you crunch the numbers.
Can I get a £290,000 mortgage if I’m self-employed?
While many lenders that prefer their customers to have a steady, predictable source of income, providing your affordability is consistently sufficient to cover your repayments alongside your monthly expenses, there’s no reason you shouldn’t be considered.
Some lenders may request a larger deposit or have stricter affordability requirements, but that certainly isn’t always the case. In fact, there are some specialist lenders on the market who provide competitive mortgage deals specifically for the self-employed.
Be sure to prepare your tax records ahead of submitting an application. Most mortgage providers will request one or more of the following:
Two or three years’ certified accounts.
SA302 forms.
An HMRC tax year overview for the previous two to three years.
Will I be able to get a £290k mortgage if I have bad credit history?
Lots of people are under the impression that they will be unable to get a mortgage if you’ve got bad credit history, but this isn’t always the case. There are also specialist lenders for bad credit mortgages - the trick is knowing where to look.
Credit issues, especially the more severe types such as CCJs, IVAs or recurring missed or late loan payments can affect your choice of providers because many UK lenders aren’t willing to loan large sums of money to borrowers with a poor track record of money management.
This can seem harsh, especially if the instance occurred some time ago or loans have repaid, but the fact of the matter is they are available to view on your credit file for six years. Thankfully, some lenders will factor this in alongside the rest of your circumstances, before coming to a decision.
The expertise that a mortgage broker can provide if you have a history of adverse can be invaluable, as they know which lenders are most likely to accept you and under what circumstances. For example, deposit and affordability requirements.
What other factors affect my eligibility to get a £290k mortgage?
If you decide to proceed with an application, bear in mind that the majority of lenders will consider the following alongside the information you’ve already provided before coming to a decision as to whether they will accept you and on what terms:
How long you’ve been in your current job - those who have been working for the same company for a number of years may be considered lower risk than someone who is constantly changing jobs.
The type of property you want to buy - non-standard construction types (i.e. those not brick walled and tile roofed).
How old you are - over 60s may be capped on how much they can borrow or be offered shorter mortgage terms than younger applicants.
Check your eligibility for a £290,000 mortgage today
While it may be tempting to apply to multiple lenders to Test your chances of getting an application approved, this can negatively impact your credit score, which is definitely something you want to avoid - especially if you have previous instances of adverse on your record.
If you have any questions or want to find out your eligibility for a £290,000 mortgage, ask a broker to compare your options on your behalf. This method saves you time, it’s free, and it won’t damage your credit report.
