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How Much Can I Borrow on a Mortgage?

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Typically, you can borrow 4.5 times your income, however, there are some lenders that will borrow up to 6 times.

Here’s an example:

The exact amount you can borrow on a mortgage will take in to account your income, existing credit commitments, your age, credit score, and property valuation.

If you have been told by a bank that you can’t borrow enough on a mortgage, don’t worry, a mortgage broker will be able to use their experience and knowledge of lending criteria to find a more suitable lender.

How Much Can I Borrow Calculator

Work out how much you can borrow by using our free mortgage calculator.

Income 

How much you can borrow on a mortgage will depend on your income, both the make-up and stability. If you are in receipt of benefits, some lenders will consider this income and will allow us to use this in the affordability calculation.

If you are employed, how much you can borrow will depend on your salary, regular overtime, and bonuses.  Also, the length of time you have been with your employer and whether you are on a probationary period will have an impact. It is possible to get a mortgage from a new contact of employment, such as a teacher with a contract starting in a few months’ time.

Calculating how much you can borrow on a self employed mortgage can be a maze without a mortgage broker by your side. The lending criteria is vast for self employed applicants and results will vary significantly.  Self employed will cover limited company owners, contractors, freelancers, umbrella company workers, and sole traders.  

Existing Credit Commitments 

Besides a mortgage, the biggest credit commitment that we see when discussing borrowing capacity is a car loan that can cost several hundreds of pounds per month. If it’s a joint mortgage application, it’s common that both applicants have a form of car finance.   

Along with car loans, other credit commitments that are considered when considering how much you can borrow on a mortgage include, child maintenance, student loan, school fees, outstanding credit cards and personal loan balances, hire purchase agreements, and store card arrangements.   

Your Age 

Your age is considered when considering how much you can borrow on a mortgage. An older applicant will have less years to repay the capital back over the term making the payments much more expensive per month which can make monthly payments unaffordable.

It’s not uncommon now for first time buyer mortgages to run a capital repayment mortgage for 35 to 40 years which lowers the monthly payments.

The good news is that we offer a range of over 50s mortgage advice solutions that are available for both purchasing a new property or remortgaging.

Each mortgage lender has different lending criteria relating to age therefore it is important to seek specialist advice to explore all your lending options, especially if you are looking for maximum borrowing. 

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Credit Score 

The amount you can borrow on a mortgage will depend on your risk profile to the mortgage lender, if you have an impaired credit score then you are considered a higher risk by the lender and your borrowing capacity will be lower.

There are lenders that offer bad credit mortgages, these include county court judgements, missed payments, and defaults.  We find that many customers contact us as they have historic bad credit from when they were younger, the good news is that we are usually able to find a lender that can help.

If you have bad credit, the bigger the deposit you have available the better for your borrowing capacity as the risk is lower for the lender. 

Property Valuation 

The type and construction of property that you are buying will also determine the amount you can borrow on a mortgage. 

As part of the application process, your lender will perform a valuation on your property to ensure it is worth what you are paying for it. If for any reason it gets down valued, the lender will reduce the amount it will borrow, you’ll then have the option to renegotiate with the vendor on the price or put more deposit down yourself. 

The valuation may also recommend that a survey is carried out on the property, depending on the results of the survey, this can also have an impact on the amount you can borrow on a mortgage. 

Variance 

As you can see from the above example, £135,000 to £180,000, is a huge difference in how much you can borrow on a mortgage.  It is amazing how much variation there is in the results from lender to lender.

If you are considering buying a property soon then it is always important to speak with an independent mortgage broker to know your borrowing capacity. Relying on online mortgage calculators can be inaccurate and may result in you viewing properties not in your price range.

Following our initial conversations, we will produce you a mortgage agreement in principle certificate that you will be able to use to back up any offers that you make on a property.    

How big a mortgage can I afford?

How big of a mortgage you can afford will depend on various factors including your income, existing credit commitments such as personal loans and credit cards, your outgoings, and your credit score.  Typically, you will be able to borrow 4.5 times your income, however, some lenders will go up to 6 times depending on your situation.

A good place to start when budgeting for a mortgage is to do a basic budget planner so you have a good idea what your current and future income and outgoings will be and how much money you have left over per month.

Also, the bigger the deposit you can put down on the property will help you secure a lower interest rate. For example, if you have a 5% deposit available, you’ll likely be paying a higher rate of interest than those with a 10% deposit. Mortgage deals are charged accordingly based on your risk profile; therefore, a bigger deposit reduces the risk thus they can offer a lower rate.

What size mortgage can I get on my salary?

Here is a summary of approximately how much mortgage you will be able to get with your salary, this can be a joint salary or combined with a partner.  The figures below are for illustrative purposes only, our mortgage advisor team will be happy to provide you with more accurate figures following a free consultation.

Anything else, please use between 4.5- and 6-times salary for the calculation.

What salary do I need for a mortgage?

Here is a summary of approximately how much salary you will need to qualify for a mortgage amount, this can be a joint salary or combined with a partner.  These figures are for illustrative purposes only, our mortgage broker team will be happy to provide you with a personalised quotation.

Anything else, please divide your salary by 6 and 4.5 to achieve the range.


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About the Author

Malcolm Davidson

Managing Director of UK Moneyman LTD

Malcolm is one of the UK’s most well-known and respected Mortgage Advisors. He is passionate about providing a 5* customer experience and he has also trained and mentored dozens of fellow Advisors in a career that is now in its third decade.

In addition to his day to day duties as Managing Director, Malcolm still gives out mortgage advice and feels lucky that his job is also very much his hobby.

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