UK residential mortgage - how much do you need to earn to get one in 2025?

Many people who would like to buy their own property in the UK in the future wonder how much they would actually need to earn to get a mortgage. To get a better understanding of this topic, it’s worth familiarising yourself with some key concepts. We’ll explain them in today’s article, as well as an estimate of how much you should be earning to stand a chance of getting a residential mortgage.

What affects your creditworthiness?

Let’s start with the fact that it is impossible to say unequivocally how much you need to earn to get a home loan in England,Scotland,Ireland or Wales. A 20-year-old single working on a zero-hours contract will be a completely different customer for the bank, while a 40-year-old father of three who is self-employed or employed will be a different one. Also important is your deposit, which determines the loan-to-value ratioof the loan - combined with good creditworthiness, it gives you the opportunity to buy a more expensive property or get better terms.

A loan for a £1 million house will require you to have a completely different income than for one costing £200,000. Well, that’s right, and do you know what property prices are like in the UK right now?

However, it is worth pointing out that there is a way to estimate the amount of money you can borrow from a bank. Before we get into that though, let’s look at the hugely important concept of affordability.

What is affordability?

We can translate this term simply -affordability is simply the ability to allow yourself to afford something, or in this case, a residential mortgage. The bank to which you apply to lend you money must first check that you will be able to give it back to them.

The bank will ask you not only about your earnings, but also about your form of employment or additional income. Depending on the source of the money, you will have to document your income even for the last 2 years. In this respect,self-employed persons and directors of Ltd. companies are in the most complicated situation, in contrast to full-time employees, whose earnings are stable and easy to prove.

However, earnings are not everything. Banks take into account the structure of your spending by looking at the number of children you have, your credit card debts or the debt-to-income ratio, i.e. the existing mortgages you are already paying.

If you are planning to take out a residential mortgage and are just getting ready to apply, you can significantly improve your situation. It’s worth trying new challenges to increase your earnings, for example through overtime, applying for a promotion or finding a new job. It’s also just as important to cut down on expenses - maybe you should cancel some subscriptions or reduce your budget for holiday trips?

Now that we’ve got the concept of affordability out of the way, it’s time for some more numbers. How much do you need to earn to get a residential mortgage in the UK?

How much do you need to earn to get a residential mortgage?

Let’s start with some statistics. According to the latest ONS report, the average annual salary (gross) in April 2024 was £37,430 for a full-time job. For our further consideration, we will be looking at a married couple where both people work full-time, so their annual earnings are above £70,000.

Roughly speaking, most banks will agree to lend an amount which is between 400% and 475% of the gross annual income of the applicant(s). We can therefore assume that the statistical UK couple can expect to borrow between £300,000-£355,500 for a home, although of course much depends on their expenses, the support schemes used or their contribution.

How much can I borrow in my current position?

The above figures are based on statistics and, as is common knowledge, everyone’s situation is slightly different. Banks calculate the affordability of residential mortgage applicants on a case-by-case basis, so instead of relying on projections, it is worth using specific people and tools. The two simplest methods are:

Extend Finance consultation

You will get the most accurate answer regarding your affordability from a professional. As a brokerage firm, we use a number of publicly unavailable tools to make a precise calculation. An additional advantage is that you can ask us questions; after all, we deal with mortgages every day and have up-to-date knowledge. The final decision on whether to grant you a residential mortgage always rests with the bank, but the help of a broker is really useful.

Calculators available online

In our opinion, a very good calculator is available on the Money Helper Mortgage Affordability Calculator website. By entering basic details of your income and expenditure into it, you will get your approximate creditworthiness.

Whichever way you choose, it is worth contrasting the results you get with property prices in the area you are interested in. This will give you a fairly accurate picture of your purchasing ability.

Will I get a residential mortgage? If yes, what one?

As I mentioned, all these calculations are predictive and really only indicate a likely scenario. If you want to know what your mortgage chances are and are determined to buy a home in the UK, I encourage you to contact our company.

Extend Finance is a whole-of-market broker, which means we are not limited to specific co-operating banks and look to find clients the best deals of all possible . We can check your financial situation and acceptance criteria with each bank. We can also suggest which bank is the easiest to get a mortgage from. Our staff look forward to hearing from you.