Whether you are moving or buying your first home and need a mortgage, your first question is usually “How much can I borrow?” Once you know what’s possible, you can set a budget, start comparing mortgage lenders and begin looking at properties in the right price range.
Most UK mortgage lenders cap borrowing at around 4.5 times your annual income, but this isn’t guaranteed. It is subject to the lender’s affordability checks, which include your deposit and credit history. It can be helpful to use an online mortgage calculator to get a rough idea.
Read on for YesCanDo Money’s guide to how much you could borrow for a mortgage in the UK, including advice on how to improve your borrowing potential.
For free, independent advice on your next mortgage, please contact the YesCanDo Money team.
How mortgage borrowing is calculated
When deciding how much to lend you, mortgage providers typically start with income multiples. They simply multiply the applicant’s income (or combined income if it’s a joint application) by a set number to estimate how much they may be willing to lend.
Most mortgage providers consider 4 to 4.5 times your salary. So, if your joint income is £60,000, a lender may consider a loan of £240,000 using a simple income multiple. But this is never guaranteed. Your eligibility depends on several factors, including your credit history. More on this below.
Some Banks and building societies may offer 5 times your salary or even more, but it’s uncommon and depends on your financial situation and the lender’s affordability checks.
Mortgage borrowing examples by salary
The table below is for illustrative purposes only. These figures are examples, not a guarantee. The amount a mortgage lender offers will be subject to affordability checks and lending criteria.
| Annual income | 4x income | 4.5x income | 5x income |
|---|---|---|---|
| £20,000 | £80,000 | £90,000 | £100,000 |
| £30,000 | £120,000 | £135,000 | £150,000 |
| £40,000 | £160,000 | £180,000 | £200,000 |
| £50,000 | £200,000 | £225,000 | £250,000 |
| £60,000 | £240,000 | £270,000 | £300,000 |
| £70,000 | £280,000 | £315,000 | £350,000 |
| £80,000 | £320,000 | £360,000 | £400,000 |
| £90,000 | £360,000 | £405,000 | £450,000 |
| £100,000 | £400,000 | £450,000 | £500,000 |
Can you borrow 5 or 6 times your salary?
Some lenders offer mortgages at 5x or even 6 times your total household income, but it’s uncommon.
You may have a better chance of accessing a higher income multiple if you have a large income, little debt, a generous deposit and a low loan-to-value ratio. An impeccable credit history would also be a must for most high street lenders.
Some lenders also consider higher income multiples for borrowers in professions like healthcare and law.
Use our mortgage affordability calculator
To give you an idea of what you could borrow, use our mortgage affordability calculator. This is particularly helpful whether you are a first-time buyer, moving home or looking for a new mortgage.
Just enter your income, and it will give you an idea of how much you could borrow in principle based on most, some and a few lenders.
Remember, it’s just an estimate. The mortgage amount, interest rate and deal you are offered are based on your entire financial situation and the banks criteria.
What affects how much you can borrow?
How much you can borrow depends on your income, costs and your overall financial status. Before making a mortgage offer, lenders carry out affordability checks to give them confidence that you can afford the monthly payments, even if they rise in the future.
What do lenders take into consideration?
Whenever you borrow money, the lender must be confident that you can repay it, and mortgages are no different. To assess your affordability and the likelihood of you defaulting on the loan, the lender will look at your income and outgoings including:
- Your annual income (combined if making a joint application), including any overtime, bonuses, commission or a second job
- Self-employed income, pension income or rental income
- How much deposit you have compared with the purchase price (your Loan to Value LTV ratio)
- Your credit score and history
- Loans, credit card repayments and other debts
- Household bills and regular outgoings, such as childcare and transport
The lender will use this information to calculate your debt-to-income ratio, which is the portion of your monthly income that goes towards debt repayments. For example, if you earn £3,000 a month before tax and pay £600 a month towards loans, credit cards or other debts, your DTI ratio is 20%.
The DTI is used in the affordability assessment to help inform how much you could borrow. So, while a generous income can help, if you also have large debts, it may reduce how much they are willing to lend.
How to improve your mortgage borrowing potential
If you want to improve your borrowing potential, there are a few steps you can take. However, at YesCanDo Money, we always urge caution. A bigger mortgage might mean a bigger home, or a better postcode, but it also means higher mortgage repayments and a greater long-term commitment.
1. Include all supplemental income in your application
If you earn supplemental income on top of your basic salary, you may be able to borrow more. This might include overtime, bonuses, commission, shift allowances, income from a second job, rental income or self-employed income.
Not all lenders treat this income in the same way. Some may use all of it, some may use a percentage, and others may not include it at all.
2. Save a bigger deposit
While you might be itching to buy your first home, waiting and saving for a larger deposit can improve your chances of borrowing more and getting better mortgage rates. And with a bigger deposit, you may also reduce your monthly mortgage payments and the total interest you pay over time.
3. Reduce debts and commitments
Reducing credit card balances, loans and other debts may improve your affordability and prove to lenders that you are a responsible borrower.
4. Consider a joint mortgage
If your income is not enough on its own, applying with another person may increase how much you can borrow. This doesn’t just apply to couples. You could apply with a family member or even a friend.
5. Speak to a mortgage broker
A whole-of-market broker can compare lenders, explain your mortgage options, and look for the best deal for your individual circumstances. As well as saving you time and giving you more confidence, they may have access to a wider range of lenders and products not available directly to the public.
Can’t borrow what you need?
Getting declined for a mortgage can feel like a real setback. If you are not in a position to borrow what you need, you could follow the advice above, or perhaps consider a guarantor mortgage. This is when a family member supports your application using their savings or property as security. Although this clearly comes with risks for them, it is a big decision for most people.
A mortgage broker can also help you find specialist lenders that may be willing to offer a higher income multiple.
Ask us how much you could borrow
To get a helpful answer about how much you can borrow, speak to a mortgage broker. At YesCanDo Money, we will consider your mortgage affordability and let you know what both high street and specialist lenders might be willing to lend.
Our friendly team will make sure you fully understand the terms of the mortgage and what the repayments might be before you make a decision. You can then set your budget and get house hunting, while we complete the mortgage application on your behalf. If you are remortgaging we will use a remortgage calculator to get you the best interest rate and deal.
And the best part? We don’t charge a fee for our services.
Contact us for free mortgage advice today
Frequently asked questions about mortgage borrowing
How many times your salary can you borrow for a mortgage in the UK?
UK lenders typically offer mortgages up to 4 to 4.5 times your salary. Some lenders offer 5 times your income or more, but it depends on your finances, deposit, property value and the lender’s affordability checks.
Is mortgage borrowing based on gross or net salary?
Mortgage borrowing is based on your gross income before tax. Lenders will then look at your outgoings and debts to determine your debt-to-income ratio. They will use that to decide if you are likely to meet the monthly repayments and to inform how much they are willing to lend.
What salary do I need for a £400,000 mortgage in the UK?
For a £400,000 mortgage, you will need an annual salary of £80,000 to £100,000, based on a typical 4 to 5 income multiple. The exact figure will depend on your deposit, debts, credit history and lender’s criteria.
What mortgage can I get with a £40,000 salary in the UK?
With a £40,000 salary, you may be able to borrow around £160,000 to £200,000, based on 4 to 5 times your income. The exact amount depends on the lender, deposit, costs and overall affordability.
