If your dream home requires a £250k mortgage, you may be wondering how much you need to earn to qualify for a mortgage of this size and whether or not you will meet the other eligibility criteria set by lenders.
In this guide, we will tell you everything you need to know about getting a £250,000 mortgage and how likely your chances will be if you want to borrow an amount of this size. But if you have any questions after reading our guide, don’t hesitate to get in touch with our friendly and experienced team who will be happy to give you further information.
How much do I need to earn to get a mortgage of £250,000?
Lenders typically calculate mortgage affordability using income multiples.
Most lenders use an income multiple of 4.5, which would require you to earn £55,000 for a £250k mortgage, but some use multiples of 3 or 4 times an annual salary and there are a limited few who will use multiples of 5 or 6.
Your earnings would need to be higher than £55,000 if your lender bases your affordability using lower income multiples than the typical 4.5 but if they offer higher income multiples, your earnings can be lower.
If you were applying for a joint mortgage, the lender would use the combined income of both parties, so you could still pass the lender’s affordability checks if your sole earnings didn’t cover their income requirements.
What income multiple will you be offered?
Lenders consider applications on a case-by-case basis. The less risky you appear to lenders, the better your chances of being offered a mortgage based on a higher multiple of your salary.
You could be eligible for a higher multiple if:
- You are a high earner
- You are able to pay a larger deposit
- You are buying a standard property type
- You are willing to accept a longer mortgage term
You may be offered a lower multiple if:
- You have a bad credit history
- You want to pay a smaller deposit
- You are buying a property made from non-standard construction
- You want to pay off your mortgage over a shorter loan term
Ultimately, the multiple that is considered will depend on the mortgage lender you choose and their specific requirements. We can put you in touch with the lender that is right for your financial situation so get in touch with our team to learn more.
Calculate whether your income stretches far enough for a £250k mortgage
To get a ballpark figure on the amount you may be able to borrow based on your total household income, use our mortgage affordability calculator.
Buts other factors can affect your borrowing ability, we can give you a more accurate figure should you decide to use our services.
The average salary for all employees in the UK in 2022 was £27,756, according to the Office for National Statistics (ONS). This represents a 6.8% increase from the previous year.
If two applicants apply for a mortgage with a income of 2 x £27,756, they will have a joint income of £55,512. Using this average income data with the average mortgage income multiple of 4.5x, the rough mortgage they will be able to afford is £249,804.
Use the table below to check whether or not your annual salary is enough to cover each monthly repayment on a £250k mortgage.
Example calculations table
To determine how much you may be able to borrow based on your annual income, check out the table below which details some example calculations. Remember to factor in the income of your partner if you are applying for a joint mortgage.
|Income||4x income||5x income||6x income|
How working with a broker can maximise your borrowing
When looking for a loan amount of any size, it’s vital that you end up with a deal that is affordable to you, with monthly mortgage repayments that don’t stretch your financial capability. This is especially true when applying for a £250k mortgage as your repayments may be quite high over the deal period.
Our fee-free mortgage brokers can assess your financial situation and eligibility for a £250,000 mortgage. If your household income covers the overall cost of the mortgage, we will help you find a lender that is suited to your particular set of circumstances.
We will also advise you on how much deposit you need to put down to get the best deal on a £250,000 mortgage and let you know of the other steps you can take to maximise your borrowing.
After finding you the right lender and deal, we will also prepare your mortgage application on your behalf to improve your chances of mortgage approval.
We can do all this and more, for free, so if you need to get a 250k mortgage for your dream home, get in touch with our team today.
Other factors that may impact your eligibility for a £250k mortgage
Your income isn’t the only factor that can impact your eligibility for a £250,000 mortgage. The following factors will also be taken into account by lenders when deciding how much to lend to you.
It’s actually beneficial to put down a larger deposit for a lower loan to value as you will be considered less of a lending risk so your chances of getting a £250k mortgage will be higher. You will also be eligible for the best mortgage deals with lower monthly payments and reduced interest rates over the deal period.
More on: Loan To Value
Your job can affect your eligibility for a mortgage and the mortgage terms that you will be offered.
Higher-income multiples are often afforded to people in high-earning professions, such as those who are a doctor or a solicitor. The reverse is true for people with low-earning professions or those whose jobs could be considered unusual or unstable.
Whatever your profession, we can put you in touch with a mortgage lender that is right for your situation. And regardless of your earnings, we will make sure you are given a deal that is one you can afford.
More on: Mortgages for Professionals
Poor credit history
You won’t necessarily be ruled out of a mortgage if you have past credit issues but the total cost of your mortgage could be higher because the deals and deal period you are offered are likely to come with higher interest rates. That being said, it depends on the severity of your credit problems, but it’s still wise to improve your credit score before you apply for a mortgage as you will have access to better deals with lower rates of interest.
Many lenders have age restrictions in place when deciding who to lend money to, with some imposing an upper limit of 75. As such, your mortgage options will decrease as you get older, especially when you pass retirement age.
It’s possible that you will be charged higher rates of interest if you wish to borrow money as an older applicant so the total cost of your mortgage could rise. However, an expert mortgage broker from our team can still search the market on your behalf to find a deal that will provide you with an affordable monthly repayment schedule.
It is possible to get a 250,000 mortgage for a buy-to-let property but the eligibility criteria for buy-to-lets can sometimes be quite strict. Check out our buy-to-let guide to learn more about the stipulations set by mortgage lenders for buy to let investors.
Second homes or unique properties
Getting a £250k mortgage is certainly possible if you want to buy a second home, most lenders cap the LTV at 80% so you will have to put down a 20% deposit or more.
The mortgage deal you are offered will depend on the type of property you are buying, be that for your first or second home.
You should have little trouble getting a mortgage if you are buying a home made with standard construction (such as bricks and mortar) but if the lender considers the property non-standard, you may be ruled out of a mortgage. This isn’t true for all lenders, but as only certain lenders offer mortgages to buyers wanting to buy unique property types, your chances of getting a mortgage will be improved if you use the services of a mortgage broker.
More on: How much deposit for second home?
Can you afford repayments on a £250k mortgage?
Your income might allow you to get a £250k mortgage but you need to make sure you can afford the monthly repayments before you make an application to borrow money.
Your home could be repossessed if you don’t keep up with your mortgage monthly repayments and you could run into difficulty if you can’t afford the monthly costs associated with your various bills, so you should consider your own circumstances before you choose to borrow a loan of this size.
There are a number of factors that will determine how much your mortgage repayments will be, regardless of your annual income. Such factors include:
The interest rate you are offered
The higher the interest rate, the higher your monthly repayment will be.
The mortgage term you choose
Your repayments will typically be lower over a longer mortgage term and higher over a shorter mortgage term.
Whether you opt for an interest-only mortgage or a repayment mortgage
Your monthly repayments will be lower if you choose an interest-only mortgage but the total cost of your mortgage will be higher due to increased interest charges. You will also have to pay the remaining balance of the mortgage when your deal ends.
Your monthly payments will be higher with a repayment mortgage as you’re paying off both interest and capital but you will have nothing left to pay at the end of your loan term.
Whether you opt for a fixed rate mortgage or variable rate mortgage
Fixed-rate mortgages sometimes come with higher interest rates so this will affect the size of your repayments. However, you have the peace of mind that the interest rate on your loan won’t rise over time. When you reach the end of your mortgage deal, you should remortgage before you fall onto your lender’s standard variable rate. This is because your lender’s standard variable rate will typically be higher than the fixed rate you were originally on.
Variable-rate mortgages often come with lower rates of interest but as these rates aren’t fixed, your repayments could increase if interest rates rise.
A mortgage advisor from our expert broker team can help you work out how much your monthly repayments are likely to be over the deal period based on these factors.
But to get an average figure, enter your target mortgage amount into the repayment calculator below and check how your repayments will vary based on the interest rate and term length.
Mortgage Repayment Calculator
Compare payments on a £250k mortgage based on loan term, mortgage type, loan to value,250, and interest rate by using the mortgage repayment calculator below.
YesCanDo Money can help you get a £250,000 mortgage
An expert mortgage broker from our team will check your affordability for £250,000 mortgages and if you are able to afford the overall cost of a loan, they will search the mortgage market on your behalf to find you the best deal.
If we think there may be obstacles in your way when applying for a mortgage via a mainstream lender, perhaps because you’re self-employed or because you have a patchy credit history, we will narrow our search to the specialist lenders who will be more likely to give you a mortgage.
We will do all this and more FOR FREE so you won’t have to pay us a penny for our services. This is just one way in which we can help you save money. As we can also reduce the overall cost of your mortgage by finding you the most affordable deal, this is another way in which you will be able to make savings if you choose to use us for your mortgage.
To learn more, get in touch with our team today. Enter your details into our contact form or get in touch with us by phone (03300884407) or WhatsApp and we will arrange a first appointment with you.
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