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Annual income of £40,000 is considered above average earnings in the UK, and it’s more than possible to get a mortgage with this amount of salary. Here you will learn how much you can borrow, how to begin your application and more.
What size mortgage can you afford with a £40k salary?
Most mortgage providers would offer you a mortgage of around £180,000 with this amount of income. This average figure is based on 4.5 times your salary, the typical income multiple UK lenders use to work out maximum borrowing, but it may be possible to borrow more.
Given that a smaller number of lenders offer mortgages of up to 5-6 times salary, a minority of borrowers with £40,000 income can potentially borrow up to £240,000.
There are several factors behind mortgage affordability that will affect your borrowing capacity. You can read up on these factors and do some calculations of your own below.
Calculate how much you can borrow
You can use our mortgage calculator below to work out how much you can potentially borrow. Hit the ‘calculate’ button to get some quick results for £40,000 income, but you can manually change the salary amount if you wish to make some comparisons.
Now that you have done your calculations, you can compare mortgage rates and deals for free on Teito and speak to a broker if you need a little help - get started here.
Factors that will impact your affordability
Your income is the main factor the lender will take into account when assessing your affordability, but other factors will come into play too. Below are the variables that will determine the exact amount you can borrow with a salary of £40k per year.
- Outgoings: Fixed monthly expenses including council tax, utility bills, broadband, loan or credit cards agreements, car payments and childcare costs will be offset against your £40,000 salary when the lender is assessing your affordability.
- Supplemental income: You may be able to get a mortgage based on slightly more than £40,000 if you have supplemental income to declare on top of your main salary. This may include bonuses, commission, overtime, benefits or investments.
- Deposit amount: The amount of mortgage deposit you can put down may have an indirect effect on the amount you can borrow, as some lenders reserve their higher income multiples for borrowers with lower loan-to-value (LTV) ratios.
- Employment situation: It can be possible to borrow up to 6 times salary if you are in a profession such as medicine or law. Those who are self-employed with complex income or limited accounts may have to settle for a lower income multiple though.
- Other factors: Other factors that can have an indirect effect include having bad credit, buying a non-standard construction property or the mortgage term running into your 75th birthday. In short, the stronger your application, the better your chances of being able to access mortgage deals based on higher salary multiples.
If you need to borrow more, your best bet is to speak to a mortgage broker as they have deep working relationships with lenders who offer 5-6 times salary mortgages.
Example calculations
With outgoings and supplemental income factored in, the amount of disposable income you are declaring on your mortgage application might be more or less than £40k. With this in mind, the table below shows example calculations for similar amounts based on a range of different income multiples, including less common ones like 5.5 times salary.
Salary Amount | 4 Times Salary | 4.5 Times Salary | 5 Times Salary | 5.5 Times Salary | 6 Times Salary |
£38k | £152,000 | £171,000 | £190,000 | £209,000 | £228,000 |
£39k | £156,000 | £175,500 | £195,000 | £214,500 | £234,000 |
£40k | £160,000 | £139,500 | £200,000 | £220,000 | £240,000 |
£41k | £164,000 | £184,500 | £205,000 | £225,500 | £246,000 |
£42k | £168,000 | £189,000 | £210,000 | £231,000 | £252,000 |
£43k | £172,000 | £193,500 | £215,000 | £236,500 | £258,000 |
£44k | £176,000 | £198,000 | £220,000 | £242,000 | £264,000 |
Calculations all done? Here are your options now...
How to apply for a £40,000 salary mortgage
The first step was running some calculations to find out how much you can borrow earning £40k per year. Next you can compare mortgage rates for free on Teito, choose the one you want in real-time and access support from an independent mortgage advisor.
Here are just some of the reasons customers choose our service:
- You can access mortgage rates for free in second
- Our brokers have access to exclusive deals
- We are 5-star rated on leading review websites
- You can secure an agreement in principle in seconds
Ready to source your own mortgage and take advantage of a free, no-obligation chat with a whole-of-market mortgage broker? Get started here.
FAQs
The mortgage lender will take an average of your salary over a period of 2-3 years and apply their income multiple to that. If you consistently earned £40,000 each year during that period, your maximum borrowing shouldn’t be any different to someone in full-time employment.
If you earned £40k during the last year only or have been self-employed for no longer than 12 months, it could still be possible to get a mortgage and declare this amount of income, but speaking to a mortgage broker before you proceed is recommended.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.