Earning £75,000 per year puts you in a strong position when looking to purchase a home. But the key question remains: How much can you borrow?
Mortgage lenders take multiple factors into account beyond just salary. They assess affordability based on your deposit size, financial obligations, and overall creditworthiness. In this guide, we’ll outline how much mortgage you may qualify for, factors influencing mortgage approval, and ways to maximize your borrowing power.
How Much Can You Borrow on a £75,000 Salary?
Most mortgage lenders in the UK apply an income multiple between 3.5 and 5 times your annual salary when determining borrowing limits.
- 3.5x salary: £262,500
- 4x salary: £300,000
- 4.5x salary: £337,500
- 5x salary: £375,000 (available with select lenders)
While these figures provide a useful guideline, the actual mortgage amount lenders offer depends on factors such as your financial stability, deposit amount, and existing commitments.
What Affects Mortgage Affordability?
Beyond salary, mortgage lenders assess a range of financial factors to determine affordability.
1. Existing Financial Commitments
Your current financial obligations—such as personal loans, credit cards, and car finance—reduce the amount you can borrow. Reducing your debt can significantly improve your mortgage affordability.
2. Credit Score and Financial History
A high credit score improves your chances of securing a mortgage at competitive rates. If your credit history contains missed payments or high debt levels, lenders may lower your borrowing limit.
3. Essential Living Costs
Lenders analyze your monthly expenses, including rent, utilities, and discretionary spending, to gauge affordability. Maintaining a responsible spending pattern may enhance your borrowing power.
4. Deposit Size and Loan-to-Value (LTV) Ratio
A larger deposit reduces the loan-to-value ratio, lowering the lender’s risk and often securing better mortgage rates.
5. Employment Stability and Income Sources
Lenders prefer borrowers with stable and consistent employment. If you’re self-employed, you may need to provide additional proof of income, such as tax returns and financial statements.
Example Scenario: Home Purchase on a £75,000 Salary
If you earn £75,000 annually, have a 10% deposit, and minimal debts, here’s how much home you could afford:
- Loan amount (4.5x salary): £337,500
- Deposit (10% of property price): £37,500
- Potential home price: £375,000
Your final mortgage amount will depend on your lender’s specific criteria and your financial situation.
The Importance of Your Deposit in Mortgage Affordability
Your deposit plays a crucial role in determining interest rates and borrowing capacity.
- 5% Deposit (£18,750) – Higher mortgage repayments, limited lender options.
- 10% Deposit (£37,500) – More lenders available with improved rates.
- 20%+ Deposit (£75,000+) – Access to the best mortgage deals with lower borrowing costs.
A larger deposit improves affordability by lowering the Loan-to-Value (LTV) ratio, making homeownership more manageable in the long term.
Government Schemes for Homebuyers
If saving for a deposit is a challenge, consider these government-backed homeownership programs:
- Help to Buy Equity Loan – Provides a 20% loan (40% in London) for new-build properties 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 – Offers 30-50% discounts on selected properties for first-time buyers and key workers.
These schemes make homeownership more accessible by reducing the initial financial burden.
How to Increase Your Mortgage Borrowing Potential
To secure a higher mortgage or more favorable loan terms, consider these strategies:
- Reduce Outstanding Debt – Paying off existing loans and credit cards improves affordability.
- Strengthen Your Credit Score – Ensure all bills are paid on time, reduce debt balances, and check your credit report for errors.
- Save for a Larger Deposit – A bigger deposit leads to better mortgage options and lower monthly repayments.
- Apply for a Joint Mortgage – Combining incomes with a partner or family member can significantly increase borrowing capacity.
- Work with a Mortgage Broker – A broker can identify lenders offering higher income multiples and flexible criteria.
Additional Costs to Budget for When Buying a Home
Beyond mortgage repayments, buying a home comes with extra expenses. Budgeting for these ensures a smooth process:
- Stamp Duty – First-time buyers in England and Northern Ireland pay no Stamp Duty on properties up to £425,000.
- Solicitor and Conveyancing Fees – Covers property searches and legal paperwork.
- Mortgage Arrangement Fees – Some lenders charge setup fees.
- Survey and Valuation Costs – Ensures the property is valued correctly and structurally sound.
- Home Insurance and Moving Costs – Includes insurance policies, removal expenses, and furnishing costs.
Factoring in these costs prevents financial surprises during the home-buying process.
Choosing the Right Mortgage Type
Different mortgage products cater to various financial needs. Here are some common options:
- Fixed-Rate Mortgage – Provides stability with fixed payments for a set term.
- Tracker Mortgage – Follows the Bank of England base rate, meaning payments may fluctuate.
- Interest-Only Mortgage – Lower monthly payments initially, but requires a repayment plan for the loan principal.
- Variable-Rate Mortgage – Interest rates change over time, affecting monthly repayments.
Selecting the right mortgage depends on your financial goals and risk tolerance.
Final Thoughts: Can You Buy a Home on a £75,000 Salary?
A £75,000 salary provides a strong foundation for securing a mortgage, but the actual amount you can borrow depends on your deposit, existing debts, and lender criteria.
With careful financial planning, a stable income, and a solid deposit, you could qualify for a mortgage in the range of £262,500 – £375,000.
For personalized mortgage advice and access to the best mortgage deals, consulting a mortgage broker can help streamline the process and maximize your borrowing potential.
