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Income and salary needed for a mortgage in the UK

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Jan 8, 2023

Emma Lunn

Fact Checked By:
Emma Lunn - Finance Editor

What income or salary is needed for a mortgage in the UK?

We often get asked a common question: “How much annual income do I need to make to get the mortgage I want?”

This question doesn’t have a straightforward answer. This is because each mortgage lender uses its own criteria to determine income and affordability.

It would be best to contact us today for free mortgage advice and to be introduced to a mortgage lender or one of our expert mortgage advisors who match your requirements and annual income; to do this get your quote below:

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What is the minimum income required to obtain the mortgage you want?

Our advisors are market experts, which means that even if your credit score is not perfect, they can still give you the best mortgage advice.

After looking at your annual income and outgoings, they will also need to determine the monthly payment that you can afford and what the interest rate may be.

This is known as an affordability assessment.

Your ability to pay the mortgage repayments must be assessed by the lender.

This is so you can still afford your monthly mortgage payment in the event that the interest rate goes up or your lifestyle changes, such as:

  • Redundancy
  • Becoming a parent
  • Being too ill to work

Most lenders may limit the amount you can borrow if they feel you are unable to pay your mortgage payments.

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How can you calculate how much income you will need to get a mortgage?

To determine how much you can borrow to get a mortgage, lenders have traditionally used a basic income multiplier. Lenders don’t use the exact same income multiple formula so some lenders may be more generous than others.

Lenders will typically base their lending on a figure of more than 4 times your salary. Some will use 5x your salary, while others will use 6x your salary.

A lender that uses 6 times your income could offer you a mortgage at 50% more than one that uses 4 times.

A joint mortgage may be more beneficial if you’re in a couple with a dual-income household. You can use your combined earnings for a greater mortgage size.

Instead of spending time researching each lender’s income multiple policies, why not let us do it? Get your mortgage quote below and we can let you know any income needed for mortgage applications in the UK right now:

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What the lender considers

The lender will consider:

1. Your income

This includes:

  • Your basic income
  • Income from your investments or pension
  • Income in the form of child maintenance and financial support by ex-spouses
  • Any other earnings that you may have, such as overtime, commission, bonus payments, or work from home

As proof of income, you will need to submit bank statements and payslips.

If you’re self-employed, you’ll need to provide:

  • Bank statements
  • Business accounts
  • Details of the income tax that you have paid.

You will usually need to provide tax returns and business accounts for two or three years.

2. Your outgoings

These could include:

  • Repayments on credit cards
  • Maintenance payments
  • Insurance – building, contents, travel, pet, life, etc
  • Any other loans or credit arrangements you may have
  • Bills such as water, gas and electricity, phone and broadband

A lender may ask for estimates about your daily living expenses, such as clothing and leisure activities.

You might be asked to show them recent bank statements in order to verify the information you provide.

3. Future changes that could have an impact

The mortgage lender will also consider what will happen if:

  • Interest rates rise
  • You or your partner lose their job
  • You can’t work due to illness
  • You have a child

It is important to plan ahead for how you will pay your bills.

You can, for example, help protect yourself from unexpected income drops by starting to save as soon as you can.

Make sure you have enough money to cover three months of expenses, plus your mortgage payments.

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How can other factors impact how much you have to borrow to get a mortgage?

Additional income

It is important to include all income earned beyond your basic salary, such as overtime, bonuses or allowances.

Some lenders may not accept all forms of additional income. Earnings from overtime and bonuses may be limited. Most lenders will accept 50%, but others will accept 75% or 100%.

You can increase your chances of getting the mortgage amount that you need to purchase your property by including any income you earn.

Read our article about additional income to get more information about the different types of income available and how lenders view them.

Outgoings

The only way to tell the whole story is to use your earnings totals to calculate the maximum mortgage amount you can get. To accurately determine if you can afford your mortgage payments, a lender needs to know how much money you are spending each month.

For example, if you make £100,000 per year but your outgoings total £99,000, can you afford a mortgage of £400,000?

All UK lenders must now conduct an affordability analysis of your current expenditures and a ‘stress test’ for any future expenses, as per the 2014 Mortgage Market Review.

This assessment will determine what type of mortgage a lender is willing to offer.

Talk to an expert on affordability

As mortgage brokers we are available to answer your questions or to make enquiries.

Relax and let us find the broker who is best suited for your situation. There is no charge and absolutely no obligation to improve your credit rating.

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FAQs

How will my deposit impact on the amount I can borrow to get a mortgage?

Lenders have their own requirements regarding the amount of deposit required. You’ll need at least a 5% deposit to get a mortgage, but 10% or 20% is better.

Lower deposits mean that fewer lenders will accept your application. It can be difficult to find a lender willing to accept a low deposit but offer a generous income multiple policy. It’s why you should contact us to have a specialist look at your situation.

What effect will a bad credit history have on my chances of getting mortgage approval?

A poor credit history can have an impact on your chances of getting mortgage approval. This depends on what type of issue you had and when it was registered.

This will invariably reduce the number lenders that would consider the application. While some lenders won’t accept mortgage applications with credit problems, there are a few specialists lenders that will take into consideration someone with poor credit.

You can also send us an enquiry and we will refer you to the expert we work with who will fulfill your needs, do this below:

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