Getting a mortgage for £160,000 could allow you to purchase a property whether that be for the first time, a second home, or for a buy-to-let purchase.
There are lots of different factors that affect your ability to obtain a mortgage for 160k, so we’ve listed them below as well as some advice on how to go about finding the best interest rate.
Am I eligible for a 160k mortgage?
You can use a mortgage calculator for a rough guide on how much you can borrow but to really understand whether you’ll be eligible for a loan of that amount and under your chosen lender’s terms and conditions, it’s best to ask a broker.
They can look at your circumstances as a whole and compare multiple lenders who may be more likely to approve a 160k mortgage.
To source appropriate lenders and to prepare you for the questions that most lenders will need answering before they can accept you as a borrower, our brokers will look at your:
Employment
Income vs outgoings
Credit History
Age
Chosen property type
It’s important to provide up to date and accurate information when working with a mortgage broker because the information you provide will be used to find the most relevant lenders.
Even if you’ve got affordability issues such as low income or bad credit, there may be lenders in the UK who are willing to accept you, it’s usually just a case of finding them.
How much do I need to earn for a £160,000 UK mortgage?
Some lenders use a multiple of 4.5 x a yearly salary, others 5 and a small minority of lenders will even consider up to 6 x a person’s annual income, to calculate how much they can lend.
To be considered for a mortgage deal with income multiples of 6, you would likely need a low debt-to-income ratio and good credit history. Though these factors can contribute towards helping you access better deals, it’s important to remember that not all lenders are the same.
However, if a lender used a lower income multiple of 4.5 x your annual salary to calculate how much they could lend you and you wanted to borrow £160,000, you would need a minimum income of £35,555.
Hypothetically, if your chosen lender used an income multiple of 5, to qualify for a £160,000 mortgage, you’d need a minimum income of £32,000 a year and in exceptional circumstances where they’d consider 6, you’d need a minimum income of £26,666.
The amount of income you need for a mortgage will vary heavily between lenders, as will the other criteria that you need to meet. This can make the search feel frustrating as there isn’t really a one size fits all answer, however, working with a mortgage broker can help to alleviate a lot of the hassle.
How do I provide evidence of my income for a £160k mortgage?
Depending on whether you’re employed or self employed, your lender will likely ask for evidence of your income in the form of:
Bank statements
Pay slips
Tax returns
Can I get a mortgage for £160k if I’m self employed?
Some self employed borrowers can find their choice of lenders is reduced in comparison to the range of lenders who prefer employed applicants with regular income.
That being said, there are many lenders in the UK that provide mortgages to self employed workers, whether they’re freelancing or contractors.
Often, it’s your affordability as a whole that lenders are concerned with and how likely you are to default on your mortgage. If a lender looks at your financial situation and deems that the loan is affordable, it may well be possible to get approved for a £160,000 mortgage.
Having proof of future work can help to prove the reliability of your income as this is something that lenders will also look closely at. This could be in the form of a contract or a letter.
You’ll also need:
Two or more years' certified accounts
SA302 forms
A tax year overview (from HMRC) for the past two or three years
Some lenders can also ask for higher deposits, though that’s not always the case.
Contact a mortgage broker for free and they’ll help you find the best lenders for self employed mortgages up to £160,000.
How much deposit do I need to buy a £160,000 house?
Although there are lenders in the UK that may provide mortgages with 90% loan-to-value ratios, many lenders are asking for larger deposits of up to 30% in some circumstances.
The amount of deposit you’ll be asked to put down will depend on lots of factors but applying for a loan with a lower LTV ratio can sometimes help you to access a wider range of lenders and therefore, better rates.
Savings rates are currently low, though that’s not to say that saving a larger deposit is impossible and with the right advice about your mortgage, it could be possible to find an advantageous deal.
See the table below to learn more about how your deposit size can lower the amount you have to borrow.
Property value | Deposit size as a percentage | Deposit size in GBP | Mortgage amount | LTV ratio |
£160,000 | 5% | £8,000 | £152,000 | 95% |
£160,000 | 10% | £16,000 | £144,000 | 90% |
£160,000 | 15% | £24,000 | £136,000 | 85% |
£160,000 | 20% | £32,000 | £128,000 | 80% |
£160,000 | 25% | £40,000 | £120,000 | 75% |
Can I get a BTL mortgage for £160,000?
A £160,000 buy-to-let mortgage may be provided if you meet the lender’s criteria, which may require you to deposit a larger proportion of the property’s market value. Some lenders ask for deposits between 25 - 40%.
Hypothetically, if you wanted to buy a property worth £160,000, you could need a 25% deposit of £40,000. A broker can calculate how much deposit you could need with a range of BTL lenders and can highlight the pros and cons of each choice.
Where can I find the best mortgage deal for a 160k mortgage?
If you’re hoping to get approved for a £160,000 mortgage, speak to one of our brokers who can check your eligibility on your behalf ahead of you making an application.
They can search the market and show you the lenders that can offer you the best rates, under the best terms.
Call 02380 980304, or fill out our contact form to let us know about your plans to get a mortgage for 160k.
