How much mortgage can I afford? Your salary gives you a starting point, but lenders look at the wider picture. They will also review your spending, debts, deposit and credit history.
Even if a lender offers more, borrowing the full amount may not suit your budget. After all, your monthly mortgage repayments still need to leave room for bills, home costs and any rise in interest rates. With a clear budget, you can focus your search on homes you can comfortably afford.
What affects how much you can borrow?
Estimate your starting point
Use 4.5 times your annual income as a rough guide. Depending on your circumstances, some lenders may offer more.
Work out your monthly costs
Include credit cards and loans, childcare and other regular spending in your monthly total.
Check your deposit amount
Putting down a bigger deposit can lower your loan-to-value. As a result, you may have more mortgage options.
Test a higher rate
Compare your chosen rate with a higher one to see how a rate rise could affect your budget.
Estimate what you could borrow
See what you might be able to borrow with our mortgage affordability calculator.
How do lenders assess affordability?
Lenders begin an affordability assessment by looking at the money you have coming in and going out each month. Your household income matters, but so do your financial commitments.
However, lenders may count salary, overtime, bonuses, commission and other income in different ways.
Next, they check household costs such as childcare and car finance. They also see whether you could keep up with the repayments if rates rose.
Finally, your age, mortgage term and number of dependants can affect the result. As the rules differ, your mortgage eligibility may change from one lender to another.
See how you could improve your mortgage affordability →
How much mortgage can I get?
If you are asking, “How much can I borrow for a mortgage?”, your income provides a useful starting point. As a rough guide, many lenders use around 4.5 times your annual income. If you apply with someone else, they may use your combined income.
However, some first-time buyers may qualify for up to 5.5 times their income. Whether you qualify will depend on the lender and your finances.
Annual income used
Example borrowing at 4.5×
Example borrowing at 5.5×
£30,000
£135,000
£165,000
£50,000
£225,000
£275,000
£70,000
£315,000
£385,000
The figures are examples only. A lender will also check your spending, debts, deposit and mortgage term.
To estimate your property budget, add your deposit to the mortgage amount. For example, £225,000 of borrowing plus a £25,000 deposit gives a £250,000 budget before fees.
See what you could borrow
Get an Agreement in Principle in minutes and start your property search with a clearer budget.
What mortgage can I afford comfortably?
Can I afford a mortgage and still cover my other costs? To answer that, set a monthly payment that leaves enough room in your budget.
For example, a £200,000 repayment mortgage over 30 years costs about £1,074 a month at 5%. If the rate rose to 7%, the payment would increase to about £1,331. Neither figure includes mortgage fees.
Beyond your mortgage payment, budget for Council Tax, energy, water, repairs, service charges and insurance. Depending on your needs, you may also want to consider life insurance.
How Muttuo Mortgages can help
Mortgage affordability can vary between lenders. We can help you understand what may be realistic based on your finances.
Review your income and regular commitments
Compare mortgage options from more than 100 lenders
Understand your realistic borrowing range
Important information
Your lender may repossess your home if you do not keep up with your mortgage repayments.
Talk through your options
Explore your mortgage options and understand how different lenders may assess your finances.
How Muttuo Mortgages can help
Each lender looks at your finances differently so that mortgage affordability can vary. As a whole-of-market mortgage broker, Muttuo compares options from more than 100 lenders.
Muttuo Mortgages can help you:
✓
compare mortgage rates, fees and lender criteria
✓
review your income and regular commitments
✓
estimate a realistic borrowing range
✓
prepare and manage your mortgage application
Ready to explore your options?
Speak to Muttuo for help comparing lenders and finding a mortgage that fits your budget.
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Your lender may repossess your home if you do not keep up with your mortgage repayments.
