A £100000 mortgage over 25 years will cost you £614.09 per month and cost you a total of £184227.00 over the lifetime of the mortgage.
Can you afford a £100,000 mortgage over 25 years?
Your ability to afford a £100,000 mortgage over 25 years will depend on two things.
Your mortgage deposit for the £100,000 mortgage.
Your salary for the £100,000 mortgage.
For a mortgage of £100,000 over 25 years, you will need to have a mortgage deposit of between 5% to 20% on top of the mortgage.
This means you already have between £5,000 and £20,000 saved away for this mortgage.
If you don’t then the best way to increase your mortgage affordability will be to use the government’s first-time buyer and home mover schemes to improve your affordability for a £100,000 mortgage over 25 years.
First-time buyer government schemes include:
- Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy- allows you to buy your home at a discount price.
- Preserved right to buy– same as above.
- Right to acquire- same as above.
You will then need an income suitable to a £100,000 mortgage.
Mortgage lenders use an income multiple to figure out exactly how much they can lend to you.
This income multiple varies between mortgage lenders but is typically between 3 and 5.
This means if you want to get a £100,000 mortgage you will need an income of at least £100,000 divided by 3. Which is £33,333.
To see if you are eligible for an £100,000 mortgage, speak to a mortgage broker.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.