Mortgage on 500k (How to)
By
HuutiMoney
In this brief guide, we are going to talk about getting a mortgage on 500k and what the monthly mortgage repayments on a 500k mortgage will look like.
This means we will consider how to get a mortgage if you have a salary of 500k and how to get a 500k mortgage.
How to get a mortgage on a 500k salary
To get a mortgage on a 500k salary you will need to follow the same steps as anyone else.
You will need to make a mortgage application to a mortgage lender who will consider your mortgage affordability and then give you a mortgage offer if they feel you can afford the monthly mortgage repayments for the term of the mortgage or reject your mortgage application if they feel otherwise.
If you are not confident of making a mortgage application by yourself then you should consider using a mortgage broker.
What is the maximum you can borrow for a mortgage on 500k
The maximum you can borrow for a mortgage on a 500k salary will depend on the mortgage lenders income multiple.
Some mortgage lenders offer an income multiple of 4 whilst others may offer as much as 5.
The mortgage lenders income or mortgage multiple determines the maximum mortgage lender is willing to lend to you.
Mortgage lender income multiple table for a mortgage on 500k
| Income multiple | Maximum mortgage on a 500k salary |
| 2 | 1,000,000 |
| 3 | 1,500,000 |
| 3.5 | 1,750,000 |
| 4 | 2,000,000 |
| 4.5 | 2,250,000 |
| 5 | 2,500,000 |
| 6 | 3,000,000 |
As you can see the mortgage lenders income multiple plays a big difference in what the maximum mortgage you may be able to get on a 500k salary is.
What types of 500k mortgages can you get?
Some of the mortgages you could get with a £500 000 mortgage include:
Fixed-rate £500 000 mortgages:
With these mortgages, the rates are fixed for a period of 2, 3 or 5 years and provides you certainty over your mortgage term.
Variable-rate £500 000 mortgages:
You can access a host of variable mortgages through a mortgage lender and these mortgages will have a variable rate which can be increased or decreased at any time by the mortgage lender.
Tracker £500 000 mortgages:
You can access a host of tracker mortgages from most mortgage lenders. These mortgages will usually track the bank of England’s rate and will move in line with it although it may not be the exact rate but rather a rate which will increase by the same point or increase by the same point as the bank of England rate.
£500 000 Remortgages:
You can access a host of remortgage options for a £500 000 remortgage.
£500 000 buy to let mortgages:
Some buy to let mortgage lenders have a minimum amount they will lend but you may be able to get a £500 000 buy to let mortgage with some specialist buy to let mortgage lenders. A buy to let mortgage broker will be able to assist you in this regard.
What credit score do you need for a mortgage on 500k?
The credit score you will need for a mortgage if you earn 500k a year will be the same as the credit score other borrowers will need.
This is because mortgage lenders may not necessarily view your credit score in line with your earnings although they may view it in tandem with how much of a mortgage deposit you put down as this will greatly affect the level of risk they have on the mortgage.
Someone with a bad credit score who puts down a more substantial mortgage deposit may be more likely to get the mortgage than someone with a bad credit score who puts down a smaller mortgage deposit.
This means mortgage lenders do not necessarily plan any demands on what credit score you may have based on your income and hence a mortgage on a 500k income will be assessed in the same way as any other mortgage when considering your credit scores.
In the second part of this guide, we will consider how to get a mortgage of 500k.
How to get a mortgage of 500k?
To get a mortgage of 500k you will need to pass the mortgage lenders mortgage affordability assessments.
These will usually be the same amounts regardless of if you are getting a mortgage on 500k or a mortgage on 700k.
You may need to first get a mortgage in principle then go on to apply for a full mortgage offer from the mortgage lender.
If you have no experience or understanding of mortgage then you may want to consider using a mortgage broker to help you get your 500k mortgage.
When looking to give a mortgage offer most mortgage lenders will consider:
Your mortgage deposit
Your mortgage deposit plays a big part in whether you can afford a mortgage or not. Most mortgage lenders will no require a minimum mortgage deposit of 5% but you may be able to get a mortgage with a smaller mortgage deposit if you have a guarantor or use a family deposit mortgage.
Your personal circumstances
Your personal circumstances play a big part in determining your mortgage affordability. If you are a self-employed borrower, a borrower with complex income or a much older borrower then you may find it much harder to get a mortgage on 500k.
If you are pregnant and about to take work leave or in such similar circumstances then this may also affect your overall mortgage affordability.
Your credit score
Your credit score plays a big role in assessing your mortgage affordability. Mortgage lenders prefer to lend to those who have a good credit score.
The type of property (e.g is it a non-standard construction)
The type of property you are trying to buy will affect your ability to get a mortgage. If you are looking to get a mortgage on a grade II listed building you may find it much harder than otherwise.
The loan to value
The loan to value on a mortgage will play a big factor on if you are able to get a mortgage or not. Most mortgage lenders will have their own internal loan to value rate as part of their internal risk scoring.
The size of the mortgage
The size of the mortgage also plays a big role in whether you will be able to get a 500k mortgage. If your income is not sufficient to cover the monthly mortgage repayments then it is unlikely the mortgage lender will give you the mortgage.
The income multiple
Your income multiple will likely be used by the mortgage lender to determine if you can get a mortgage of 500k. Different mortgage lenders use different income multiples so you may be able to find one which can accommodate you.
And the term of the mortgage
The term of the mortgage is also very important as if the mortgage lender does not feel you will be able to keep on making the monthly mortgage repayments for the mortgage term then they are unlikely to give you the mortgage.
How much do you need to earn to get a 500k mortgage?
As mentioned above the income multiple is one of the key factors a mortgage lender will consider before giving you a mortgage of 500k.
The mortgage lenders income multiple determines the maximum they may be willing to lend to you.
The income multiple below will give you an idea of what the minimum annual income you may need to earn before a mortgage lender will consider you for a 500k mortgage is.
| Mortgage multiple | Minimum income |
| 2 | 250,000 |
| 3 | 166,666 |
| 3.5 | 142,857 |
| 4 | 125,000 |
| 4.5 | 111,111 |
| 5 | 100,000 |
| 5.5 | 90,909 |
As you can see from the above, the mortgage lenders income multiple can greatly affect if you can get a 500k mortgage with a particular mortgage lender.
What mortgage deposit do you need for a mortgage on 500k?
For a 500k the mortgage deposit you will need will depend on the mortgage lenders criteria. Different mortgage lenders will each have different mortgage deposit requirements.
You can, of course, increase your mortgage deposit by using a government scheme where eligible.
The table below gives you an idea of the possible mortgage deposit requirement on a 500k mortgage:
| Mortgage deposit % | Mortgage deposit required |
| 5% | 25,000 |
| 10% | 50,000 |
| 15% | 75,000 |
| 20% | 100,000 |
| 25% | 125,000 |
If you have bad credit, buying a non-standard construction house or have anything which may reduce your mortgage affordability then expect the mortgage deposit requirement from the mortgage lender to be much higher.
Government schemes for 500k mortgages
There are many government schemes which may be able to help you get a mortgage on a 500k property, get a 500k mortgage or a mortgage with a 500k salary.
You should be aware that some of these government schemes may have income caps.
You may also be able to use these government schemes as a first-time buyer or as a home mover.
Some of the 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.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
How to improve your credit score for a mortgage on 500k?
If you are considering buying a house and getting a mortgage for 500k then you may want to improve your credit score before applying to the mortgage lender.
A higher credit score may make the mortgage lender look more favourably on you whilst having bad credit may make it much harder for you to get a mortgage on 500k and could potentially leave you with mortgage rates which are much more expensive than what someone with a good credit score may have received.
Bad credit could include:
Missed credit repayments such as mortgage or loan repayments
County court judgements
Bankruptcy
A home repossession
A debt management plan
Late credit repayments
Being registered on CIFAS
It could also include payday loans on your account.
To improve your credit score you should first look to find out what your credit score is.
If you are unsure of what your credit score is then you should check your credit score from the four credit bureaus in the UK: Experian, Crediva, Equifax and Transunion.
Some of these credit bureaus may charge you a fee to view your credit report so what you can alternatively do is request a statutory credit report which is a free credit report which each credit bureau must provide to you upon you requesting it.
Alternatively, you can also use credit score services such as Checkmyfile and clearscore to check your credit report.
Once you have found out what your credit score is you can then take the below steps to prepare you for a 500k mortgage:
- Get on the electoral roll
- Get a credit builder card or loan (e.g loqbox) to show good repayment behaviour
- Get a secured credit card to show good repayment behaviour
- Avoid missing any credit repayments
- Keep your total credit utilisation below 30%
- Avoid payday loans
Mortgage on 500k calculator
If you want to get a 500k mortgage you may want to consider using a mortgage calculator to see what your monthly mortgage repayments could be based on the mortgage deposit you put down and the mortgage term
Get a mortgage on 500k
You may want to consider using an independent mortgage broker to get a mortgage.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.
In this brief guide, we talked about getting a mortgage on 500k and what the monthly mortgage repayments on a 500k mortgage will look like.
If you have any questions or comments please let us know.
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.