Are you eligible for a £310,000 mortgage?

Since the pandemic shut down the property market earlier this year, the industry has rarely been so busy during the winter months.

There has been talk of the government extending the Stamp Duty holiday, but without any certainties it stands to reason that we’ve been inundated with prospective buyers trying to secure a hefty mortgage before the deadline.

So whether you’re a first-time buyer, buy-to-let investor or commercial loan seeker, this guide is for you if you're looking for a mortgage in the region of £310,000. If you’re in a hurry, contact us here for a call-back from one of our expert advisors, or phone us on 02380 980304.

What do I need to know before I apply for a £310K mortgage?

One of the first things you can do to get an idea as to whether you’ll be approved for a mortgage of this size is to use a mortgage calculator - simply input your income and deposit amount and you’ll be able to find out how much you may be eligible to borrow.

However, tools like this are only a guide and don’t take into consideration other important factors - many of which can be the make or break of an application. For the most accurate eligibility estimation, speak to an advisor who will assess your circumstances in full.

To avoid making any mistakes with a mortgage application, you should should prepare to answer questions surrounding the following before applying:

• Deposit size - lenders typically have minimum deposit requirements, although this will also be dependent on other factors.

• How much you earn and your monthly outgoings - lenders will use this to assess whether your affordability is sufficient affordability to cover mortgage repayments on top of your other expenses.

• Your credit history - options may be limited if you have a history of adverse, although there are lenders specialising in bad credit mortgages.

• Job type - if you’re self-employed you can be deemed higher risk. Your contract type and length of time in your current role may also influence eligibility.

• The type of property you want to buy - a higher deposit is usually required for commercial loans and buy-to-lets due to the associated risk, and some lenders are wary of lending on non-standard construction types.

• Your age - over 60s are often capped on how much they can borrow, or offered shorter mortgage terms than younger applicants.

Rest assured that there are providers available covering all niches, you just need to know where to find them - and that’s where we can help. Our brokers have access to over 100 UK banks and specialist lenders - contact us for advice.

How much deposit do I need to get a mortgage of £310k?

Nowadays, 5% and even 10% deposits are few and far between. In today’s market, the majority of mortgage providers require a minimum of 80 - 85%% loan-to-value (LTV) i.e. 15 - 20% deposit. 

The table below illustrates the relationship between deposit size and mortgage amount for a residential property with a market value of £310,000:

Of course, your personal circumstances will be taken into account, but buy-to-let (BTL) mortgages and commercial loans are typically deemed higher risk, so deposit requirements tend to be greater - usually between 25 - 40%.

If you can afford to put down a larger deposit, do so. This will instil greater trust in lenders, and therefore open you up to a wider range of providers and better rates. Plus, you will end up paying less interest in the long-run.

In previous years there have been many incentives to help first-time buyers (FTBs) onto the property ladder, including 5% deposit options. 

But as mentioned, 90 and 95% LTV mortgage deals are increasingly hard to come by since the pandemic. That being said, the PM has recently spoken of “creating more 5% deposit opportunities for first-time buyers”

Contact us to discuss your options with an advisor who can recommend the most suitable lenders for FTBs, whilst taking into consideration your other circumstances.

Even if you’ve never bought a property before, provided you can prove your affordability and meet additional lender requirements, there’s no reason you shouldn’t qualify for a £310k mortgage.

How much do I need to earn for a £310,00 mortgage?

Income is an important factor for lenders because it gives them an indication as to whether your earnings are sufficient to cover your monthly repayments. 

While rules vary by provider, most allow borrowers to apply for mortgages up to 4 - 4.5x their annual income. This means that you will need to earn £77,500 - £68,900 respectively a year for a £310,000 mortgage (if you’re applying for a joint mortgage your combined earnings should be accounted for).

But they are also interested in your other fixed outgoings, such as:

• Loans.

• Credit cards.

• Car finance payments.

• Household bills.

• Other fixed expenses such as childcare fees.

Lenders will look at your monthly expenses alongside your income to determine your affordability. This is calculated by dividing your fixed monthly expenses by your income and multiplying by 100, and expressed as a percentage. 

35% and above is generally seen as ‘good affordability’ - although lenders may stress-test how the addition of a mortgage will impact this,

How does my job impact my eligibility for a £310,000 mortgage?

If you’re a full- or part-time employee, prospective lenders are likely to ask for evidence of your income in the form of bank statements and pay slips.

If you’re self-employed or a contractor, mortgage providers may deem you as higher risk - especially if your monthly take-home fluctuates. Some may request a larger deposit or have stricter affordability requirements, but that isn’t always the case. Some lenders even specialise in competitive self-employed mortgages.

If you are your own boss, make sure you have your financial records in order before applying for a mortgage. Most lenders will want to see SA302 forms and at least 2 - 3 years’ worth of certified accounts and HMRC tax year overviews.

Regardless of job type, if your affordability is deemed consistently sufficient for a £310,000 mortgage there’s no reason lenders shouldn’t consider you - as long as you meet the additional eligibility requirements.

Our brokers have current, extensive knowledge regarding the mortgage landscape, and can point you in the direction of lenders most suited to your employment circumstances. Get in touch to speak to an expert.

If you’re over the age of 55 and / or approaching retirement, you may find it more difficult to secure a mortgage. Many providers cap the amount they’re willing to lend or offer shorter mortgage term lengths for older borrowers due to the posed risk.

One of the reasons for this is that your affordability is likely to be affected post-retirement. Older borrowers are also more likely to suffer from poor health, and are therefore less likely to survive the standard mortgage term length of 25 years.

But all is not lost - if you’re an older applicant it’s still possible to land yourself a favourable mortgage deal if you seek the right advice.

For the most competitive £310k mortgage with the most favourable terms for your individual circumstances give us a call on 02380 980304, or submit a request and we’ll be in touch to discuss your plans.

Our expert advisors can scour the UK market for the most competitive deals, and point you in the right direction if you require a specialist provider.