Getting a £200,000 Mortgage on Low Income.

Is it possible to get a £200,000 - £250,000 mortgage on a relatively low income?

The traditional approach to mortgage lending was for banks to give 3 times income. This means to get a £200,000 mortgage you would need to earn an average salary of £67,000 a year. If you have a partner, the bank may also lend an additional amount equal to 2 times their income.

However, for the vast majority of British workers, a £200,000 mortgage would be beyond their scope. Yet, with many UK house prices now reaching £200,000, what practical steps can be taken to getting a large mortgage on low income.

Certainly since the credit crunch, it has become more difficult because banks have withdrawn many unconventional mortgages. This means it has become more difficult with a great need to save a good deposit.




1. Saving Deposit.

A large deposit will be necessary to get a £200,000 mortgage. Firstly, banks usually offer better rates for those who are borrowing a low % of their house. This is particular important for homeowners wishing to try and get a self certification mortgage. The problem is that to save 10 - 15% of a £200,000 mortgage can be very difficult. To save £30,000 is difficult, especially if rent payments are very high. Quite often, the most popular way for getting a big mortgage on a low income is to borrow a deposit from parents or friends.

2. Mortgage against Parents House

Another option is to borrow using your parent's house as capital. Alternatively a mortgage could be got in your parents name.

3. Interest Only Mortgages

Interest only mortgages means that homeowners will only pay the interest on the loan; they will make no capital repayments. The effect of this is that, in theory, they can borrow bigger amounts because their mortgage payments will be lower. However, though these reduce monthly payments, banks will not give an interest only mortgage to first time buyers, as you still need to find ways to pay off capital



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