Before you start the process of getting a mortgage, you will want to know how much mortgage you can get and therefore what property value you can start house hunting for.
As a rule of thumb, you can get 4.5 times your income for your mortgage. This would be based on fitting the mortgage lender’s criteria and having little to no debt and an average UK income of around £28,000.
One of the first questions you will ask yourself when wanting to move home or buy a house is what size mortgage you can get. Without knowing this amount, it is impossible to start or plan to look for a new home purchase.
Once you know how much mortgage lenders are willing to lend, you can add this to the deposit you have saved and then will know the property value afford.
Mortgage lenders decide whether they will lend or not by using affordability calculators to work out how much of a mortgage you can get. The amount will be based on your income and outgoings and the mortgage payments.
With there being over 14,000 mortgage deals being offered by over 90 different banks and building societies, getting a mortgage can feel a little confusing! In this guide, we will take you through a couple of logical steps to find out your maximum mortgage as well as how you can get the lowest interest rates and monthly payment.
How much can I borrow for a mortgage
How much you can borrow on a mortgage is based on your income, outgoings, and overall affordability. Below we delve into the details of how much income is needed and mortgage lenders’ affordability criteria.
How much I can borrow based on my salary?
Calculating how much you could borrow with the “times salary method” stopped in 2014. Since then banks and building societies use a remortgage calculator as well as general mortgage calculators. It is now essential that the monthly mortgage payments are very affordable to you and your income. Lenders will look at the overall cost to you and if your finances fit.
Mortgage Lenders Criteria
All Banks and building societies these days use mortgage affordability calculators to calculate how much you can borrow. They can be called affordability calculators, mortgage calculators as well as remortgage calculators. Lenders feel that you should very easily and without any financial strain, be able to afford the payments on your mortgage. Because each lender has its own mortgage calculator, it’s important to use quite a few of them. The reason is that each bank and building society has its own mortgage calculator for working out the amount of mortgage you can have. A mortgage broker has access to all these mortgage lenders’ calculators.
Mortgage calculators are great but our advisors always recommended using them with a pinch of salt. This is because each mortgage lender has its own unique mortgage calculator alongside its lending and affordability criteria which greatly differ from lender to lender and will give you very different and sometimes incorrect amounts.
Each lender has its very own way of looking at your financial commitments when these are entered into the affordability calculator. The fields you need to be very accurate with are annual income, outstanding loans, child maintenance, and utility bills to name a few!
- Work out how much the payments on your mortgage will be with our simple mortgage repayment calculator here.
- Learn how much mortgage you can afford here with our simple mortgage affordability calculator.
Lenders will base the maximum borrowing amount on an income affordability assessment. The size of your deposit makes a difference too. The larger your deposit in proportion to the property value of the house you’re buying, the lender will be happier. A mortgage agreement in principle (AIP) is an indication that mortgage providers will be willing to lend to you and they beleive you will be able to afford the monthly repayments.
Check your credit score and get it into shape at least six months before you start looking for your new home. To check your credit history and credit rating go to a company website that offers a credit score review such as Experian and ClearScore.
How to find out how much you could borrow and your monthly payments.
Most things in life work out far better if a little time is spent planning before you start! The same goes for anyone planning a move or if you’re needing a remortgage. Each of the 90-plus different Banks and Building Societies in the UK has its own underwriting and lending criteria. Therefore although you may be asking “how do I get the maximum mortgage possible?”; getting your maximum mortgage will very much depend on your own financial situation.
Some lenders have a preference for lending more to the employed and some lenders will lend more to you if you have no loans or credit cards. The size of your deposit will also come into play giving you better mortgage rates and lower mortgage payments.
Our mortgage repayment guides:
- How much is a £150k mortgage a month?
- Can I get a mortgage for £170 000?
- What is the repayment on a 200k Mortgage?
- Can I get a mortgage for £250000?
- What are The Mortgage Repayments on a £300,000 Mortgage?
- Repayments on a 400k mortgage
- How Much Does a £500k Mortgage Cost Per Month?
Shop around for the best mortgage deals
There are over 90 different providers with over 14,000 mortgage products and interest rates including ‘specialist lenders’. It would be advisable to get the help of a fee free mortgage broker who will have access to the ‘whole market lender’s calculators. These mortgage calculators will be able to work out your affordability for the monthly payments. A fee-free broker will be able to do all the research on your behalf whilst supporting you throughout the process.
Mortgage comparison websites
This is not a bad place to start however you need to be aware that most of the comparative websites are not whole of market and in fact, most will only compare mortgages from a handful of lenders so tread carefully.
A fee free Mortgage broker
You can get fee-free mortgage advice from a broker like YesCanDo who will help you find and choose the right mortgage for you. They will provide you with a personalised borrowing amount at your best available interest rate and therefore lowest monthly repayments. Brokers compare mortgages in a more efficient way than most comparison websites. They also compare mortgage deals and mortgage rates from every lender to make sure you have the very best new mortgage deal with a trusted lender. YesCanDo is also known for having an extremely high level of customer service. Take a look at our reviews!
Below we have what we call a simple mortgage repayment calculator. This will help you to work out what mortgage you could afford based on what your mortgage repayments could be.
Work out how much your monthly mortgage payments will be
How can I compare the whole mortgage market?
This is the start of some good news for you. It is possible to search the whole mortgage market to get the lowest mortgage repayments using a broker. A broker of mortgages has access to every bank and building society and will be able to find you the lender with the lowest mortgage interest rate and monthly payments!
It gets even better! Not only will they find the lender who will let you borrow the maximum but they will also find the lender who is offering the lowest interest rate and lowest mortgage monthly repayments.
How do I find a mortgage broker?
Have any of your friends or family recently moved home? If they have, find out which broker they used and how they found the overall experience.
Alternatively, try our friend Google. A good search term is ‘independent mortgage broker near me’.
However, what if I told you there was a way of getting a broker for free! So not only are they going to search the whole mortgage market to get you your maximum amount with the lowest mortgage interest rate and monthly payments but they will do this at no cost to you!
All brokers get paid by the different lenders however most charge an additional fee. However, some of the largest mortgage brokers in the UK do not charge for their services. The easiest way to find one of these is to Google ‘free independent mortgage broker near me’ or ‘free online mortgage broker’.
This will bring up a list of brokers near you that could be very useful. Take a few minutes to check a few out and review their business and service. Have a look at their website and make sure they look professional and modern. More importantly, take a look at their Facebook and Google reviews. There should be plenty of reviews with the majority of their clients singing their praises!
Introducing YesCanDo Money a Fee Free Online Mortgage Broker
YesCanDo Money is one of the UK’s leading FREE mortgage brokerages, covering the whole of the UK. They offer free online mortgage advice, as well as telephone, video calls, and face-to-face appointments. Whether you want to renew your current mortgage and the end of its mortgage term or get a new mortgage for a brand-new property, we can help.
Started over 30 years ago YesCanDo Money thrives on being a caring family-run business that has grown by giving exceptional service to its clients. This can be confirmed by reading the hundreds of Trustpilot and Google 5-Star reviews!
Mortgage Affordability – FAQs
When looking at your annual income, lenders will want to know if the applicant’s income comes from being employed or self-employed. Self-employed earnings are often taken as an average of the last 3 years. If you’re employed then most lenders will want to know if all your income is basic or is any overtime, bonus, or commission. They will also want to know if you have any debts which will reduce the amount you will be able to borrow.
If you are wondering “how much can I borrow?” here is a rough idea of someone on £30k a year getting a mortgage: An employed person age 26 on £30,000 basic salary with no debts and no dependents would be able to borrow approximately £140,000. This will vary once put through a mortgage calculator to work out how much you could actually borrow, however, this is a good example.
Every case is looked at on an individual basis with the below questions asked:
Your annual income
If you are employed or self-employed
If you have any dependents
If you have debt such as credit cards
Your deposit amount
Any mortgage balance and mortgage account number
To give you a very rough idea of someone looking for a £150,000 mortgage. Let’s paint the picture: A young couple looking to buy their first home together in the UK (first-time buyers). They would need an annual income of at least £35,000 a year between them to suit affordability. They would need to have no loans or debts otherwise this would reduce the amount they can borrow. Every lender uses a different mortgage calculator to work out how much you can borrow. This will vary so it is best to speak to a mortgage adviser who will be able to advise you and answer the question “how much can I borrow on a mortgage?”.
As mentioned before, every case is looked at on an individual basis. A mortgage lender will look at your income and whether you are employed or self-employed. The lender will want to know such things as if you have any dependents. They will also review your debt such as credit card or loans and credit score.
To give you a very rough idea of someone looking for a £300,000 mortgage with a 25-year mortgage term: A couple looking to buy a home with a £300,000 mortgage would need to earn at least £70,000 a year between both of them. They would need to have no loans or debts otherwise this would reduce the amount they can borrow. Every lender uses a different mortgage calculator to work out how much you can borrow. This will vary so make sure you speak to a mortgage adviser who will be able to advise you and answer the question ” how much can I borrow on a mortgage for my new home?”.