If you’re looking to buy a property worth £170,000, you will be keen to know if lenders would be willing to lend you enough money for a mortgage. With the average mortgage in the UK being around £200,000 means getting a mortgage for £150,000 is achievable even with a slightly lower than average income.
We will look at the criteria used by mortgage lenders in this guide but if you would like to learn more after reading this piece, don’t hesitate to get in touch with our expert team of mortgage brokers who will be happy to advise you further.
Am I eligible for a 170k mortgage?
The biggest factor that affects your eligibility is your financial situation. If you are able to make the payments on a mortgage for £170,000 (and cover the associated fees) most lenders will be willing to accept your application.
However, there are a few other factors that might affect your eligibility for a mortgage and the monthly costs, so these should also be taken into consideration.
Mortgage lenders criteria
How heavily each mentioned factor will impact your mortgage application depends on the individual mortgage lender. Some lenders have very strict criteria while others are more flexible.
Should you choose to use our services, we will advise you on the mortgage lenders that best fit your situation after learning more about your financial circumstances.
What affects my eligibility for a £170,000 mortgage?
Lenders will often consider the following when determining an applicant’s eligibility for a mortgage.
- 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
Lender criteria can differ so while one lender might reject your application if you have a bad credit history, for example, other lenders may be willing to let you borrow money for a mortgage if your credit issues are now in the past. As mortgage experts, we can compare lenders on your behalf, so after considering the above eligibility factors, we will find a lender offering the best mortgage deals to somebody in your situation.
How much do I need to earn for a £170,000 UK mortgage?
Mortgage lenders need to make sure you are receiving enough income to repay your mortgage. As such, they will make their mortgage calculations based on your earnings to make sure you are suitable for a £170,000 loan.
Most lenders in the UK use income multiples when determining affordability. The majority of lenders use an income multiple of 4.5, so if you were applying for a mortgage worth £170,000, you would need to be earning a minimum of £37,777 a year.
In some circumstances, some lenders will use higher-income multiples and we can point you in the direction of these if we think you meet their criteria.
Use the mortgage repayment calculator further down in this guide to calculate the repayments on a £170k mortgage and check these against your monthly earnings. It might be that you’re in a position to borrow more for a more expensive property or you might need to choose a cheaper place to live if you don’t think you’re in a position to repay a £170k mortgage.
How do I provide evidence of my income for a £170k mortgage?
All mortgage applicants must provide bank statements covering the last 3 months or more. Lenders use these to cross-reference your proof of income and declared earnings with your named bank account.
The other evidence you will need to provide will depend on whether you’re employed or self-employed.
Proof of income for employed applicants
If you are working for an employer, a mortgage lender will typically ask for the following.
- 3 months payslips and 2-3 years’ P60s
- Evidence of any bonuses, overtime, and commission you have received (if this isn’t detailed on your payslips)
- An employment contract if you have recently started (or are due to start) a new job
Proof of income for self-employed applicants
It’s possible to get a mortgage if you’re a freelancer or a contractor but lenders will want to make sure that your income is both regular and substantial enough to cover a mortgage during the repayment term.
To assess your eligibility, the lender will ask for the following.
- 1 -3 years of certified accounts
- Your SA302 year-end tax calculations for the previous 2-3 years (along with your tax year overview)
- Signed copies of upcoming contracts (if you’re a contractor)
- An accountant’s certificate (not all lenders ask for this)
What would the monthly repayment be on a £170000 mortgage?
The mortgage repayments on a £170,000 mortgage will be £994.26 a month based on a mortgage rate of 5% on a 25-year term.
A number of factors will affect how much your monthly repayment might be on your mortgage. These factors include:
- The length of the mortgage term: the longer the term, the lower your monthly repayment will be
- The mortgage interest rate: higher interest rates equate to higher mortgage repayments
- The mortgage type: such as a fixed-rate mortgage, tracker mortgage, or interest-only mortgage
- How much deposit you are able to put down: a bigger deposit often equates to lower mortgage interest rates
- Your credit score: if you have a good credit score, you will be eligible for more affordable mortgage deals with lower rates of interest and a smaller monthly repayment
We will take all of these factors into account when we calculate the costs of your potential mortgage and then find ways to lower your monthly repayments to help you save money.
But if you would like an example of what your monthly repayments might be, the table below illustrates the monthly mortgage repayments on £170,000 mortgages over different mortgage terms with an annual interest rate of 5%.
|Repayment Term (Years)|
|Amount Type||5 Years||10 Years||15 Years||20 Years||25 Years||30 Years|
|Monthly Mortgage Repayments||£3,208||£1,803||£1,344||£1,122||£994||£913|
|Total interest paid||£22,487||£46,374||£71,983||£99,262||£128,141||£158,535|
|Actual interest rate (Repaid vs Borrowed)||13.23%||27.28%||42.34%||58.39%||75.38%||93.25%|
The mortgage repayment examples below are based on an annual interest rate of 5% over a 5-year to 30-year term.
You can calculate the estimated monthly costs of different mortgages using the mortgage calculator below.
For a more accurate figure, get in touch with our mortgage team who will use their calculators to work out your mortgage payments based on your exact set of circumstances.
Mortgage repayment calculator
Compare payments on a £17k mortgage based on loan term, mortgage type, and interest rate by using the mortgage repayment calculator below.
How a mortgage broker can help to get lower monthly repayments
Our fee free mortgage broker mortgage houses a team of experts who can assess your financial situation and eligibility for a £170, 000 mortgage and compare deals on your behalf before you apply to a lender. This way, you will be able to save time by not applying to lenders that may not be suited to you. You won’t risk damaging your credit score through rejected mortgage applications either!
We will tailor your mortgage to your specific mortgage needs. If you intend to repay your mortgage early or think you may want to move home early we will make sure your mortgage is both portable and also flexible with the lowest fixed rate and interest charges.
If we feel that you will get a better interest rate and at a lower cost by having a slightly bigger deposit we will give you the repayment structure for both so you can work out the overall cost and how much you want to borrow.
We will advise you on the lenders that are suitable for your employment situation and we will help you prepare the documents you need for your application.
How much deposit do I need to buy a £170,000 house?
The size of your deposit will depend on the loan-to-value (LTV) of the mortgage you are applying for.
Mortgages with a higher loan-to-value, such as a 90% LTV mortgage will require a smaller deposit, but whether or not you will be eligible for these will depend on a number of factors, including your credit score.
If you are able to save for a larger deposit for a higher LTV mortgage, you will have access to a wider range of lenders and more affordable mortgage deals with lower interest payments. This is one way to reduce your monthly costs so is worth considering if you have the financial ability to make a higher payment upfront.
Mortgage deals with smaller deposit sizes often come with a higher rate of interest. This means your mortgage repayments will also be higher. We appreciate this can make life difficult for some people but we can advise you on ways to raise funds for a deposit and reduce your loan size. If you’re a first-time buyer, our mortgage experts can also advise you on the government schemes that can help to make a mortgage more affordable.
The table and graph below illustrate how much deposit you will need to pay for mortgages at different loan-to-values.
|Property value||Deposit size as a percentage||Deposit size in GBP||Mortgage amount||LTV ratio|
YesCanDo Money Can Help
If you’re looking to get a £170,000 mortgage or even a mortgage for £180000, the team at YesCanDo Money can help. We will:
- Calculate your affordability for a mortgage
- Give you advice on how to reduce the interest payments on your mortgage
- Advise you on the mortgages that are right for your situation
- Explain mortgage fees and lender criteria to you
- Compare mortgage deals and lenders on your behalf
- Support you with your mortgage application
- Give you all the advice and support you need throughout the mortgage process
To learn more about what our team can do for you, whether you’re looking to take out a new mortgage or extend an existing mortgage, give us a call at 033 0088 4407 or use WhatsApp or our contact form to get in touch with a member of our expert team.
It’s certainly possible to get a mortgage if you’re self-employed although it’s worth noting that fewer lenders offer mortgages to people with this employment type.
Those that do offer mortgages to self-employed borrowers will often have strict requirements but this doesn’t mean you will be ruled out of competitive mortgage deals.
To improve your chances of getting a £170k mortgage, you should:
Save money for a larger deposit
Improve your credit rating
Make sure you have enough income to cover your monthly repayments
Keep your business accounts up to date
Use an accountant to help you organise your taxes
Reduce or eliminate your outstanding debts
Use the services of an experienced mortgage broker
The majority of lenders will consider how long you have been trading when they determine your eligibility for a mortgage.
While some will accept your mortgage application if you have been trading for less than a year, your mortgage chances will be improved if you wait until your business has existed for at least two years. This way, you will have more evidence to prove that your income is steady and that you’re able to keep your business going.
Lenders are often wary about lending to borrowers with bad credit because they are worried they won’t be able to make their mortgage repayments on time. However, if you do have a poor credit history, you might still be eligible for competitive mortgage deals, provided your credit issues aren’t overly severe and you have the income necessary to make your repayments.
But while it is possible to get a mortgage with bad credit, you should still do what you can to improve your credit score before you make your application. By doing so, you won’t be impacted by higher interest charges that will add to the monthly costs of your mortgage, and you will have access to more lenders willing to lend to you.
To improve your credit score, you can…
Check your credit report for mistakes or outdated information
Pay your bills on time
Avoid multiple applications for other loans
Find ways to manage your existing debt
Make sure you are registered to vote
Consider getting a credit builder card
It is possible to get a buy-to-let mortgage for £170,000 but the lender will want to make sure that the property you are buying is a good investment before approving your application.
Your chosen lender will want to know how you’re going to find tenants for the property, as they need to make sure you’re going to earn a regular rental income from your investment.
They might also want to know how you’re going to pay for your mortgage if you have late-paying tenants or no tenants in your property at all.
Should you take out an interest-only mortgage (which is the common choice for most landlords), the lender will also require you to have a plan in place to repay the capital at the end of the loan term.
Learn more about interest-only mortgages.