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If you’re planning to buy a property, one of the first questions you’ll have is how much you can borrow.
Many people hear that they can borrow around 4.5 times their income, but there’s more to it – and that’s where expert advice can make a real difference. That’s where we can help.
How Much Can I Borrow on a Mortgage?
Explained in 1 min 30 seconds
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What do mortgage lenders look at?
Lenders base their mortgage offers on affordability, which means looking at your income, outgoings, credit commitments, and overall financial health.
Each part of your finances helps shape the amount you could borrow from a lender:
Income
What you earn is a key part of working out how much you could borrow, often being the first thing lenders will look at.
Lenders often use your annual income as a starting point, with many offering up to 4.5 times your salary to work out what you might be able to borrow.
If your finances are in good shape, there are lenders who could offer five or six times your salary – giving you more freedom when it comes to choosing your new home.
For example:
- £30,000 income x 4.5 = £135,000
- £30,000 income x 6 = £180,000
They’ll also consider overtime, bonuses, and any regular allowances. If you’re self employed, most lenders will look at your average earnings over the past few years to see what kind of mortgage you could comfortably afford.
Existing Credit Commitments
Lenders factor in your current debts, such as car finance, personal loans, and credit cards, as these reduce the amount of spare income you have for mortgage repayments.
When your monthly outgoings are high, it can reduce how much a lender is willing to offer, though there are still options out there to suit your situation.
Deposit and Loan-to-Value
The size of your deposit doesn’t just influence your loan amount – it can also unlock access to better mortgage deals. A larger deposit gives you a lower loan-to-value (LTV) ratio, opening up access to better interest rates and a broader choice of lenders.
A 5 percent deposit might narrow your options for a first time buyer mortgage, but with 10 percent or more, you could unlock access to better rates and more flexibility.
Credit Score
A stronger credit score can improve the amount you’re able to borrow. Lenders check your credit history to see how you’ve managed things like bills, cards, and loans to help them understand how you manage your finances.
Any missed payments, defaults or bad credit will reduce the number of lenders available to you, and in some cases, reduce how much you can borrow.
If your credit history isn’t perfect, there are still lenders out there who understand your situation and offer options that could help you move forward with your plans.
Age and Mortgage Term
The length of your mortgage term will also influence borrowing. If you’re in your twenties or early thirties, choosing a 30 or 35 year mortgage term could help make your monthly repayments more manageable.
If you’re over 50, a shorter mortgage term might affect how much you can borrow – but there are lenders who offer later life solutions to suit different needs
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What affects the final mortgage Amount?
Even once a lender has assessed your income, other parts of the process can impact what you’re finally able to borrow.
Property Valuation
Part of the process involves a property valuation, helping the lender confirm the home’s value matches the price. If a property is valued lower than the offer price, the lender might suggest a bigger deposit or adjust the amount they’re willing to lend.
Type of Property
Some properties might need a closer look from lenders, particularly if they’re harder to maintain or built in an unusual way – but many still offer options that could work for you.
Lender Criteria Differences
Lenders often take different approaches when it comes to assessing how much you can borrow. High street banks tend to take a cautious approach, but there are plenty of specialist mortgage lenders who assess cases differently.
As mortgage brokers, we work with these lenders every day and know which ones are more flexible based on your situation.
Find Out What You Could Borrow With Your Salary
This guide gives you an idea of how much you might be able to borrow based on your income:
Income vs Potential Borrowing (Based on 4.5x to 6x Salary)
- £25,000 salary: £112,500 to £150,000
- £30,000 salary: £135,000 to £180,000
- £40,000 salary: £180,000 to £240,000
- £50,000 salary: £225,000 to £300,000
- £60,000 salary: £270,000 to £360,000
Whether it’s just your income or a joint one, the final figure will depend on your wider circumstances and what lenders see as affordable.
What We Can Do for You
Using an online mortgage calculator can give you an early idea of your borrowing potential – though for a clearer picture, it helps to speak with someone who can take everything account.
At UK Moneyman, we’ll take the time to understand your full financial situation, so we can give you a clear and honest view of what you could borrow.
When you’re ready to start house hunting, we can arrange your agreement in principle within 24 hours. Whether you’re a first time buyer or remortgaging we’re here to help you take on the mortgage process with confidence.
