What is the Average Mortgage Amount in the UK?

Buying a home is likely one of the biggest financial decisions you’ll make in your life. And for most homebuyers, securing a mortgage is necessary to purchase property. But how much does the average UK mortgage amount to? Let’s take a look at the data and what impacts mortgage amounts.

Average Mortgage Values

According to UK Finance, the average mortgage value in the final quarter of 2024 was £200,442 This was a 2% increase from the previous quarter

Over 335,962 mortgages were taken out on residential properties in that time period. While still below pre-pandemic levels, this shows an upward trend in both mortgage amounts and number of mortgages being taken out.

Looking further back the average mortgage value in Q2 2024 was £185,565. And in Q4 2022, near the height of the pandemic it was £195,788. So mortgage values have remained relatively steady over the past couple years.

Factors Impacting Mortgage Amounts

Several key factors determine the size of a mortgage you can qualify for:

House Prices

Not surprisingly, the most significant factor is the price of the property you want to buy. With UK house prices remaining high, mortgage values have also stayed elevated.

In January 2025, the average house price in the UK reached £268,548. That’s an increase of over 4% from the prior year. Greater London sees even higher prices nearing £530,000 on average.

Deposits

Most lenders require a deposit of at least 5% of the property’s value. But the more you can put down as a deposit, the lower your mortgage amount will be.

Having at least a 20% deposit also often secures you a better interest rate. But saving that much is difficult especially for first-time buyers.

Salary and Debt

Lenders assess your income, existing debts, and credit score to determine the maximum they’ll loan you. The goal is to ensure your total debt payments don’t exceed 40-50% of your income.

Higher salaries and lower debts increase the amount you can safely borrow. But rising costs of living make building savings tough.

Interest Rates

Higher interest rates mean higher monthly payments for a given mortgage amount. So as rates rise, lenders may reduce loan amounts to keep payments affordable.

Variable mortgage rates have climbed over 5% due to base rate hikes aiming to control inflation. So lenders have tightened lending criteria.

Loan-to-Value (LTV) Ratio

Your LTV ratio compares the mortgage amount to the property’s value. Most lenders cap LTVs at 85-95% depending on the mortgage type.

But exceeding a 75% LTV typically triggers higher interest rates or stricter eligibility standards. So lower LTVs increase your borrowing power.

Average First-Time Buyer Mortgage

First-time buyers often take out smaller mortgages given their limited savings for a deposit. Per UK Finance, the average first-time buyer mortgage amount was £173,104 in Q4 2024.

That’s only 86% of the £200,442 national average mortgage value. First-timers’ lower incomes and credit histories also limit their borrowing capacity.

Government schemes like Help to Buy ISAs and Lifetime ISAs help first-timers build a deposit. Shared ownership programs let you buy a portion of a property then pay rent on the remainder.

But even utilizing these, the average first-time buyer had a loan-to-value ratio of 84% in Q4 2024. Meaning they put down just a 16% deposit on average.

How Much Can I Borrow?

Determining exactly how much you can borrow requires discussing your situation with a mortgage lender or broker. They’ll assess your specific income, debts, credit, desired property, and other factors.

But you can get a general idea using an online mortgage calculator. These ask you to input details like:

• Your desired property price
• Estimated deposit amount
• Approximate household income
• Existing debts and obligations

The calculator then estimates a maximum mortgage amount you may qualify for based on common lending criteria.

This at least provides a ballpark figure to aid your home and mortgage shopping. Just be sure to get pre-approved by a lender as you begin your property search.

Getting the Best Mortgage Deal

While you may qualify for a certain mortgage amount, make sure it aligns with your budget and goals. Just because a lender approves you for a £300,000 loan doesn’t mean you have to take it.

Aim for the lowest loan amount and LTV ratio you’re comfortable with. This saves on interest and keeps payments affordable long-term.

Shopping mortgages from multiple lenders also helps find the best rates for your situation. Online mortgage brokers let you easily compare quotes from their panel of lenders.

Review both fixed and variable rates and different repayment terms. Often a 5-year fixed rate offers a good mix of low initial rates and flexibility.

Buying a home is a major milestone. But carefully planning your mortgage strategy makes the journey smoother. Understanding average UK mortgage amounts and what determines your borrowing power helps set realistic expectations.

With smart planning, research, and professional advice, you can secure the optimal mortgage for your home purchase. So you can enjoy homeownership with peace of mind knowing you’ve found the right loan for your needs and budget.