£250k Mortgages: How Much You Need To Earn & Monthly Costs

With average UK house prices on the rise, you may be looking for a £250,000 mortgage to buy the home you really want. But, how much you can borrow often comes down to the lender you deal with.

This guide covers everything you need to know about getting a £250k property loan. You’ll learn all about how much you need to earn, the deposit you need, and all the different factors that can affect your monthly mortgage repayments.

Keep reading for all the essential information or click a link below to jump to a specific section…

How much do you need to earn to get a £250,000 mortgage?

Based on the typical income multiple used by most lenders – 4.5 times annual income – you’d need to earn £55,000 to be able to borrow this amount. But the exact figure will depend on the lender you deal with.

This is because they will all use different methods to work out how much you can borrow. Some will use income multiples, which can often range from 3 to 5 times your annual salary or slightly higher. But, other lenders will have their own unique formula to calculate what you can afford.

These calculations can be based on a variety of factors relating to your finances, personal circumstances, and the property you’re looking to buy. However, your annual income will still play an important role in most cases.

Try our mortgage affordability calculator below to work out whether you’d qualify for a mortgage of this amount.

Example calculations

Although working out how much you can borrow sometimes involves complex affordability calculations, it’s quite straightforward to get a rough ballpark figure. The easiest way to do this is by looking at annual salary figures.

Here’s a few examples of how much you’d need to earn to borrow £250,000 for a mortgage, based on various levels of household income (either as a sole applicant or joint):

As you can see, it definitely helps to have a higher salary if you’re looking for a £250,000 mortgage. But don’t worry if your income doesn’t quite reach your desired borrowing amount. By speaking with the right lenders, there can be ways to make a £250k mortgage more realistic for your situation.

This could involve access to higher income multiples, which can go as high as 6 times your salary in some cases, or perhaps the inclusion of additional sources of income. There’s also plenty of other options unrelated to salary that your broker can help you explore.

Cost of monthly repayments

Your specific deal and mortgage terms will dictate how much your monthly repayments will be. But, you can try our mortgage repayments calculator below to get a clearer idea of what yours will look like.

Example repayment calculations

Your specific deal and mortgage terms will dictate how much your monthly repayments will be. But, here are some rough costs to give you an idea about how much you could pay per month for a £250k mortgage with a 3.5% interest rate:

It’s important to remember that although a longer term can reduce your monthly repayments, you’ll end up paying more over the life of the mortgage. So, it’s worth your time to find the best deal possible and the lowest rates – because what seems like a small difference will make a big impact to the cost of your mortgage in the long-run.

How a broker can help

When you’re looking to borrow £250,000, it’s important to explore every avenue to make sure you are able to get a loan of this size. It’s also vital that the deal you end up with is as affordable as possible.

Using the services of an experienced mortgage broker will help you find the lowest repayments available on a £250k mortgage. Not only will their assistance save you money, having an expert in your corner means that they can guide you through the whole application process, from start to finish.

So, if you’d like an introduction to a skilled advisor, just make an enquiry. We’ll put you in touch with an expert broker for a free, no obligation, initial chat.

Other factors affecting monthly mortgage repayments

As mentioned, your salary isn’t the only thing taken into consideration when most lenders calculate how much you can borrow and the cost of your monthly repayments.

Here’s some other important areas that can play a direct role:

• First-time buyer: if this is your first home, some lenders will offer special deals with exclusive interest rates.
• Credit history: Having bad credit can mean having to pay a higher interest rate to get approved, though there are specialist lenders who could help you keep the difference to a minimum.
• Fixed or variable interest: opting for a variable interest rate can make things cheaper at the start, but there is the possibility of higher rates in the future.
• Type of property: whether the house is a standard or non-standard construction makes a difference for lenders. So, it’s vital that you borrow from the right lender, otherwise the mortgage could end up costing you more than it needs to.
• Source of income: whether you have an employer or if you’re self-employed will be a factor. Your area of work can also make an impact, because professionals in certain fields can sometimes access unique mortgage deals.
• Extra income: it may be the case you earn bonuses/commission, work overtime, or do some extra freelance work. If you do, using a lender who will take this all into account can make a £250k mortgage more affordable.
• Mortgage purpose: whether you’re looking for a residential or a buy-to-let (BTL) mortgage will lead to different rates and loan structure. If the property you’re planning to buy is a second home or holiday house can also have cost consequences.
• Your age: this can still be a crucial area for some lenders, who will restrict your mortgage options from age 75 or age 85. But, these days you have mortgage options available no matter how old you are.

Deposit size and loan-to-value ratios

There’s no one-size-fits-all deposit size for a £250,000 mortgage. The good news is that there will be options to explore no matter what figure you’re able to put down on your new house.

Some lenders will have loan to value (LTV) ratio limits of around 70-80%. But, certain lenders will go as high as 90% or 95%. Here’s a visual guide to show you what level of deposit you need for a £250,000 mortgage on a range of LTVs:

Keep in mind, a higher LTV ratio (meaning a smaller deposit) can sometimes lead to higher rates, and a more expensive mortgage. So, it’s worth dealing with the lender who can arrange a £250,000 loan with the lowest monthly repayments based on the deposit you can afford.

Speak with an expert to find the best £250k mortgage for you

With certain lenders, it might be difficult to stretch your income to afford a £250,000 mortgage. And, some lenders will charge higher interest rates, which can make your monthly repayments on a £250k mortgage more than they need to be.

We offer a free broker-matching service. This means we’ll quickly assess your income and mortgage needs, then pair you up with an expert broker. Their experience and existing relationships with lenders will ensure they’re able to get you the best deal possible.

Just call 0808 189 0463 or make an enquiry. We’ll set up a free, no obligation chat between you and your ideal mortgage broker today.