If you earn £170,000 per year, you are in a great position to secure a mortgage, but your borrowing power depends on more than just salary. Lenders evaluate credit history, existing financial obligations, deposit size, and affordability factors before determining how much they will lend.
This guide explores how much you may be able to borrow, the factors that impact mortgage approval, and strategies to enhance your borrowing potential.
How Much Can You Borrow on a £170,000 Salary?
Mortgage lenders in the UK typically use an income multiple between 3.5 and 5 times annual salary to determine affordability.
- 3.5x salary: £595,000
- 4x salary: £680,000
- 4.5x salary: £765,000
- 5x salary: £850,000 (offered by select lenders)
These figures provide an estimate, but the exact amount depends on lender criteria, financial history, and affordability checks.
Key Factors That Influence Mortgage Affordability
Lenders consider several factors when evaluating how much they are willing to lend. Below are the most crucial elements:
1. Debt-to-Income Ratio
Lenders assess your existing debt, including loans, credit cards, and other financial commitments, to determine how much disposable income is available for mortgage repayments.
2. Credit Score and Financial Stability
A strong credit score improves your chances of securing a higher mortgage amount with better interest rates. A low credit score may lead to stricter borrowing limits or higher rates.
3. Monthly Living Expenses
Your spending habits, including household bills, insurance, and other outgoings, affect how much lenders believe you can afford to repay each month.
4. Deposit Size and Loan-to-Value (LTV) Ratio
A larger deposit reduces the Loan-to-Value (LTV) ratio, helping you secure lower interest rates and better mortgage terms.
5. Employment Type and Income Consistency
Lenders prefer applicants with stable employment and consistent income. If you’re self-employed, you may need to provide two or more years of tax returns and financial statements.
Example Scenario: Buying a Home on a £170,000 Salary
If you earn £170,000 annually, have a 10% deposit, and limited debt, your borrowing potential might look like this:
- Loan amount (4.5x salary): £765,000
- Deposit (10% of property price): £85,000
- Potential home price: £850,000
However, lenders may adjust this amount based on affordability assessments and financial obligations.
How Your Deposit Affects Mortgage Affordability
The size of your deposit significantly impacts mortgage options and interest rates.
- 5% Deposit (£42,500) – Higher monthly repayments, fewer lender choices.
- 10% Deposit (£85,000) – Access to better mortgage deals and lower interest rates.
- 20%+ Deposit (£170,000+) – Best mortgage rates with lower overall borrowing costs.
A larger deposit lowers the Loan-to-Value (LTV) ratio, making mortgage approval easier and more affordable.
Government Schemes for Homebuyers
If saving for a deposit is challenging, you may be eligible for government-backed home ownership schemes:
- Help to Buy Equity Loan – Offers a 20% loan (40% in London) for new-build properties with a 5% deposit.
- Shared Ownership – Allows buyers to purchase a percentage of a home and pay rent on the remainder, 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 can help reduce the upfront costs of homeownership.
Strategies to Increase Your Mortgage Borrowing Power
If you want to qualify for a higher mortgage amount, consider the following approaches:
- Pay Off Outstanding Debt – Reducing your existing financial commitments improves your borrowing potential.
- Boost Your Credit Score – Make on-time payments, keep credit utilization low, and check for errors on your credit report.
- Save for a Larger Deposit – A bigger deposit lowers monthly repayments and increases access to better mortgage terms.
- Consider a Joint Mortgage – Applying with a partner or co-borrower can increase total borrowing power.
- Work with a Mortgage Broker – Brokers can find lenders offering higher income multiples and flexible borrowing terms.
Additional Home-Buying Costs to Consider
In addition to mortgage repayments, homeownership comes with extra expenses. 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, contracts, and ownership transfers.
- Mortgage Arrangement Fees – Some lenders charge fees for processing mortgage applications.
- 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 stress-free home-buying experience.
Choosing the Best Mortgage for Your Needs
Different mortgage products suit different financial situations. Here are some common options:
- 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 lender rate changes.
Selecting the right mortgage depends on your financial goals and risk tolerance.
Final Thoughts: Can You Buy a Home on a £170,000 Salary?
A £170,000 salary offers strong mortgage affordability, but borrowing power depends on factors such as deposit size, existing debt, and lender requirements.
With strategic financial planning, stable income, and a sufficient deposit, you could qualify for a mortgage in the range of £595,000 – £850,000.
For expert mortgage advice and access to the best home loan rates, consulting a mortgage broker can help you secure the most competitive terms.
