£180,000 Mortgages

It’s perfectly natural to have lots of questions when looking to take out a mortgage for £180,000. It’s a large sum of money and you want to make sure you fill out all aspects of the application correctly and fully understand how it will impact your monthly finances moving forward.

This article will answer those questions and explain how applying through a broker could save you money by making sure you get the best deal possible.

Can you get a mortgage for £180,000?

Yes, of course. It’s a fairly standard amount offered by most, if not all, mainstream lenders and in the context of mortgage lending across the U.K would be below the current national average.

Whether you qualify for a mortgage of this amount will depend, first and foremost, on your annual salary. Most lenders will apply a multiple – typically 4.5 but sometimes higher – to it and offer you a mortgage based on that.

Try our mortgage affordability calculator below to work out whether you’d qualify for a £180,000 mortgage based on the standard income multiples that lenders use.

If you’ve been looking for a mortgage of £180,000, you’ve probably noticed that there are many variables in the mortgage market and monthly repayments can differ considerably. This is because each lender has their own eligibility criteria and risk profile.

This can seem confusing at first. But by using the services of an experienced broker to scour the entire market for a lender that matches your circumstances, you can make sure you get the rate and term that are best for you.

What are the monthly repayments on a £180,000 mortgage?

Your monthly repayment is based on the interest rate and length of your loan. Lenders offer their best rates to those borrowers deemed the lowest risk.

Traditionally, mortgages were taken out over 25 years, but this is no longer the only option. Borrowing over a longer term reduces monthly repayments but increases the overall cost of borrowing. Likewise, shorter term mortgages increase monthly payments, but you pay less overall.

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

Example repayment calculations

Below are some examples of how the interest rate and term affect monthly repayments on a mortgage of £180,000:

What salary do you need?

Using the traditional rule of thumb (4-4.5 times annual salary), you’d need between £40,000-£45,000. However, these days there is no set salary required for a £180,000 mortgage as income is only one element of calculating borrowing capacity.

It is true that most UK lenders will lend between 4-4.5 times the combined annual income of all borrowers, but under the right circumstances this can be up to 7 times salary. So, in reality it could be more or less than the salary variation quoted above, depending on the lender you use.

Some lenders don’t use income multiples at all and assess applications on a case-by-case basis, whereas others set minimum income requirements for particular lending requirements, such as:

• Interest only mortgages
• Self build mortgages
• Buy-to-let mortgages
• Bridging or development finance

How to calculate affordability

Income multiples give an indication of how much you can borrow, but other factors such as a low deposit or adverse credit could mean some lenders lower the income multiple they will offer you.

Providers carry out an income and expense assessment to satisfy themselves that you can afford the monthly payments. Income multiples are only a guide and it’s important you are confident you can comfortably afford the repayments.

The table below shows examples of the income multiples required to borrow around £180,000.

How much deposit is needed?

Typically, lenders like you to put down at least 15% so a £180,000 mortgage would allow you to purchase a property valued at up to £212,000:

• Property price £212,000
• 15% deposit £31,800
• Mortgage amount £180,200

These days it is not uncommon for people to get approved for a mortgage with a deposit of 5% which would allow you to buy a property worth £190,000:

• Property price £190,000
• 5% deposit £9,500
• Mortgage amount £180,500

It is possible to borrow with no deposit but only a handful of lenders offer this and there are strict eligibility criteria. The bigger the deposit you have, the more likely a lender is to approve your application.

How a broker can help with a £180,000 mortgage

Look at any mortgage comparison site and you’ll quickly see that even the rates on offer with high street lenders differ greatly. And that’s before you consider the deals on offer with specialist mortgage providers – some of whom you may never have heard of.

As you can see in the table above, changing the rate or term of a £180,000 mortgage can have a huge impact on affordability.

A broker will help you cut through the confusion to find the best deal for your circumstances and make sure you don’t overpay. If you get in touch, we can arrange for an advisor we work with to contact you straight away for a free, no obligation chat.

Other factors affecting monthly payments

Other factors that will affect your borrowing capacity and the amount you pay each month include:

• Credit file: Bad credit won’t necessarily prevent you being approved for a £180,000 mortgage but could limit your LTV or mean you pay higher rates. Specialist lenders are often your best option as they have a more flexible approach to assessing applications.
• Deposit: If a low deposit is making a £180,000 mortgage unaffordable, consider asking a family member to stand as guarantor. Alternatively, saving for a few more months to get into a lower LTV band could allow you to access lower rates and borrow the amount you need.
• Loan term: If you need £180,000 to secure your dream home, extending the term to make your monthly payments more affordable could be the solution. When your fixed rate ends and you have equity, speak to your broker about reducing the term when remortgaging to cut the overall cost of borrowing.
• Age: Most lenders have an age cap of 75 which can limit the loan term, and therefore the monthly payments, for older borrowers. Some providers cap the borrowing age at 85 so with the right lender you could borrow £180,000 over a longer term and keep repayments manageable
• Type of mortgage: The type of mortgage can affect your monthly payments too:
  • Interest only mortgages generally require a higher deposit but lower monthly payments. You will need a viable repayment vehicle to qualify.
  • A variable or tracker rate will fluctuate in line with the Bank of England base rate so your monthly payments can go up or down.
  • A capped rate means you benefit from interest rate decreases but your rate has a maximum ceiling.

Alternatives

If a £180,000 mortgage is proving too much of a stretch, don’t worry. Finding a property that is £5,000 – £10,000 cheaper could mean you drop an LTV band and can still afford to buy.

Example repayments on a £170,000 mortgage.

Get matched with a broker to secure your £180k mortgage

Trying to second guess which lenders will accept your application for the mortgage you need can be time consuming and could result in a line of rejections that can have an adverse impact on your credit file.

Our broker matching service will assess your circumstances and then find a broker that specialises in helping people in your situation identify the right lender straight away.

It only takes a few minutes to handpick the best broker for your needs. Call now on 0808 189 0463 or enquire online to arrange a free, no-obligation chat.