If you earn £155,000 per year, you have substantial financial leverage when securing a mortgage. However, lenders consider various factors beyond just salary, such as credit score, existing debt, monthly expenses, and deposit size, before determining how much you can borrow.
This guide explores potential mortgage amounts, key factors affecting affordability, and strategies to maximize your borrowing potential.
How Much Can You Borrow on a £155,000 Salary?
Most UK mortgage lenders use an income multiple between 3.5 and 5 times your annual salary to estimate borrowing capacity.
- 3.5x salary: £542,500
- 4x salary: £620,000
- 4.5x salary: £697,500
- 5x salary: £775,000 (offered by select lenders)
While these estimates provide a guideline, the final mortgage amount depends on lender-specific affordability assessments, credit history, and overall financial stability.
Key Factors That Affect Mortgage Affordability
Lenders evaluate more than just salary when determining how much they’re willing to lend. Here are the most critical aspects they consider:
1. Debt-to-Income Ratio
If you have outstanding debts, such as credit card balances, car loans, or personal loans, lenders factor these into affordability calculations. Lowering your debt improves your chances of securing a higher mortgage amount.
2. Credit Score and Financial Profile
A strong credit score increases your eligibility for competitive mortgage rates. A lower score may restrict the mortgage amount offered or result in higher interest rates.
3. Monthly Living Expenses
Lenders analyze your household bills, rent, insurance, and discretionary spending to determine how much of your income can be allocated to mortgage repayments.
4. Deposit Size and Loan-to-Value (LTV) Ratio
A larger deposit reduces your Loan-to-Value (LTV) ratio, leading to lower interest rates and a broader selection of mortgage products.
5. Employment Type and Income Stability
Lenders prefer applicants with a steady and verifiable income. If you are self-employed, you may need to provide two or more years of financial records to prove earnings consistency.
Example Scenario: Buying a Home on a £155,000 Salary
If you earn £155,000 per year, have a 10% deposit, and minimal financial obligations, your borrowing potential may look like this:
- Loan amount (4.5x salary): £697,500
- Deposit (10% of property price): £77,500
- Potential home price: £775,000
However, lenders may adjust your borrowing limits based on affordability checks and financial commitments.
The Role of Deposit Size in Mortgage Affordability
Your deposit significantly influences mortgage approval and repayment terms.
- 5% Deposit (£38,750) – Higher monthly repayments, fewer lender options.
- 10% Deposit (£77,500) – Wider selection of mortgage products and improved rates.
- 20%+ Deposit (£155,000+) – Best mortgage deals with lower borrowing costs and interest rates.
A larger deposit results in a lower Loan-to-Value (LTV) ratio, making mortgage repayments more affordable.
Government Schemes to Assist Homebuyers
If you’re struggling to save for a deposit, government-backed home ownership schemes can help reduce the upfront costs of buying a home:
- Help to Buy Equity Loan – Offers a 20% loan (40% in London) for new-build homes with a 5% deposit.
- Shared Ownership – Enables buyers to purchase a portion of a home while paying rent on the remaining share, with the option to increase ownership over time.
- First Homes Scheme – Provides 30-50% discounts on selected properties for first-time buyers and key workers.
These schemes are designed to make homeownership more accessible.
How to Increase Your Mortgage Borrowing Power
If you’re looking to qualify for a higher mortgage amount or secure better repayment terms, consider these strategies:
- Reduce Debt – Paying off loans and reducing credit card balances improves borrowing potential.
- Improve Your Credit Score – Ensure on-time bill payments, limit new credit applications, and check your credit report for errors.
- Save for a Larger Deposit – A bigger deposit leads to lower monthly repayments and better interest rates.
- Apply for a Joint Mortgage – Combining incomes with a partner can significantly increase overall borrowing capacity.
- Work with a Mortgage Broker – Brokers can help find lenders offering higher income multiples and more flexible lending conditions.
Additional Costs to Consider When Buying a Home
Aside from mortgage repayments, homeownership comes with several additional costs. Be sure to budget for:
- Stamp Duty – First-time buyers in England and Northern Ireland pay no Stamp Duty on properties up to £425,000.
- Legal and Conveyancing Fees – Covers property searches, legal documentation, and ownership transfers.
- Mortgage Arrangement Fees – Some lenders charge fees for setting up a mortgage.
- Survey and Valuation Costs – Ensures the home is priced correctly and in good condition.
- Insurance and Moving Costs – Includes home insurance, removals, and furnishing expenses.
Proper financial planning ensures a smooth home-buying experience without unexpected financial strain.
Choosing the Right Mortgage for Your Needs
Different mortgage products cater to different financial situations. Here are some common mortgage types:
- Fixed-Rate Mortgage – Locks in an interest rate for a set period, ensuring stable repayments.
- Tracker Mortgage – Interest rate follows the Bank of England base rate, meaning payments fluctuate.
- Interest-Only Mortgage – Lower initial payments, but requires a plan to repay the principal.
- Variable-Rate Mortgage – Monthly payments adjust based on market interest rate changes.
Choosing the right mortgage depends on your financial stability and long-term plans.
Final Thoughts: Can You Buy a Home on a £155,000 Salary?
A £155,000 salary provides strong mortgage affordability, but the amount you can borrow depends on factors such as deposit size, financial commitments, and lender requirements.
With careful financial planning, a stable income, and a sufficient deposit, you could qualify for a mortgage in the range of £542,500 – £775,000.
For expert mortgage advice and access to the best mortgage rates, working with a mortgage broker can help you navigate the process and secure the most competitive terms.
