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.