£100,000 Mortgages

Before setting your heart on the home of your dreams, it makes sense to know the size of mortgage you can afford. In this article, we’ll look at how lenders determine how much you can borrow, and the level of income you may need to achieve a £100,000 mortgage.

Can you afford a £100,000 mortgage?

This will depend on how the mortgage lender you approach calculates affordability. Most will base this on a multiple of your annual income, typically 4.5 or 5, though some go higher than this.

Try our mortgage affordability calculator below to work out whether you’d qualify for a mortgage of this amount based on the standard income multiples that lenders use.

There is also a clear distinction between how much you can borrow and how much you can afford to take out. These things may sound the same, but there can actually be quite a big difference between them. Lenders will look primarily at your annual income and regular outgoings, when calculating how much they are willing to lend. We’ll look at this in more detail in the next section.

It’s also important to consider from a personal perspective that you’ll be repaying your mortgage for a considerable period of time. Therefore, you should always factor in how any potential future lifestyle changes could impact your ability to comfortably afford the repayments on a £100,000 mortgage.

How much do you need to earn?

Given that mortgage providers generally let eligible customers borrow between 4.5 and 6 times their annual income, you would need to be earning somewhere in the region of £17,000 and £22,250, although slightly less than this may suffice.

If you are applying for a joint mortgage, the lender will take into account the combined salaries of everyone who will be named on the title deeds, and some mortgage providers might let you declare supplemental earnings – such as benefits or freelance work on the side – alongside your main salary.

Other eligibility factors

To determine the multiple of your salary they’re willing to offer, lenders will typically consider the following factors:

• Debt-to-income ratio – Whilst income is one key factor, overall affordability is what lenders actually use to determine how much you can borrow, which includes all regular outgoings. They will review your debt-to-income ratio to assess this – this is your income minus your fixed outgoings, so if you have a high salary, but also have large existing financial responsibilities, you may not be able to borrow as much as you think. Try our debt-to-income calculator below to work out what yours is.

• Income type and Employment status – Some lenders view certain types of self-employed income as a higher risk, which can mean fewer mortgage products to choose from. As stability of income is the main focus, the length of time you’ve been in your current role can also make a difference to both employed and self-employed applicants.  If some of your income is derived from non-salary supplements such as shift allowance or bonuses, not all lenders will use this in their calculations.
• Credit status – A stronger credit record can also mean more lenders and deals to choose from, whereas poor credit could mean the opposite. There are bad credit mortgage lenders available, however, who may be more flexible in their evaluations.
• Property Type – The type of property you buy can indirectly affect how much you can borrow as non-standard properties can mean fewer deals to choose from. For example, some lenders won’t approve finance for non-standard construction properties such as a barn conversion.

How much deposit will you need?

Most lenders will expect you to put down at least 10% of the property’s value, so for a £100,000 house that would mean putting down a deposit of £10,000.

There are, however, lenders who offer 5% deposit mortgages. If you were to approach one of these mortgage providers, the deposit requirements would fall to £5,000. Some of these lenders might increase the interest rate to offset the risk associated with low deposit lending.

As a general rule of thumb, the more deposit you’re able to put down, the better the deal you’re likely to get, but this doesn’t mean a favourable interest rate is impossible to get with a low deposit.

How income multiples affect what you could borrow

This table demonstrates how much the income multiple used by your lender in their calculation can affect the amount you can borrow.

As you can see, an applicant earning £30,000 would be unable to afford £100,000 if the lender used a multiple of 3 x their income, as the maximum they could borrow would be £90,000. On the other hand, if you find a lender willing to offer a multiple of 4 x your income, you would only need to be earning £25,000 to achieve a £100,000 mortgage.

The absolute minimum amount that you could be earning to achieve a mortgage of £100,000 would be £16,700, however, this would require a lender to offer you a multiple of 6 x your income, which can be difficult to qualify for, especially given that this type of offer is generally reserved for professionals, who are likely to have a much larger income.

How a broker can help with a £100,000 mortgage

As there are so many lenders, and criteria vary so much between them, it would be incredibly labour intensive to establish which one would offer the income multiple necessary to achieve the mortgage you need. The brokers we work with are experts in this area and know how much each specific lender would expect you to earn in order to get a £100,000 mortgage.

As they have access to every lender on the market, they can ensure that you only approach those whose criteria you are likely to meet for this level of borrowing. Whether you’re looking for a lender who will consider self-employed income more favourably or maximise the length of term available to you, we can match you with an expert who will tailor their advice to help you achieve the loan you need.

Calculating monthly repayments

Aside from the size of the loan, the factors that will have the biggest impact on your monthly repayments are the length of the loan term and the interest rate.

Try our mortgage repayments calculator below to work out what your repayments could look like.

Example repayment calculations

This table demonstrates just how significantly the length of the term and interest rates affect the monthly payments on a typical £100,000 repayment mortgage, highlighting the importance of finding competitive rates, and a length of term that suits your needs and affordability.

Whilst we’ve included interest rates ranging from 2-5%, this is for demonstration purposes only, and rates vary from lender to lender and depending on your circumstances.

Typical lender rates at the time of writing are between 2.5% and 2.9%, however, specialist mortgages for applicants with bad credit, less stable income, or a smaller deposit are likely to be higher.

Speak to an expert broker experienced in £100,000 mortgages

Let us take the hard work out of finding an expert broker with the experience necessary to find you the most suitable, and most competitive deal on a £100,000 mortgage, with our free broker-matching service.

All of the mortgage experts in our network have whole-of-market access and are accredited by us for their knowledge and experience. All you need to do is contact us on 0808 189 0463 or via this form and let us know what your home ownership goals are.

We’ll immediately pair you with the most relevant broker, all of whom offer a free initial meeting. We only work with brokers who offer a success-only payment structure, so you’ll only pay fees if they secure you a mortgage.