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.
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.
With there being over 14,000 mortgage deals being offered by over 90 different mortgage lenders, 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.
How many times my salary can I borrow for a mortgage?
Calculating how much you could borrow with the “times salary method” stopped in 2014. Since then banks and building societies use a mortgage calculator. 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.
All Banks and building societies these days use mortgage affordability calculators to calculate how much you can borrow. They are called affordability calculators as they feel that you should very easily and without any financial strain, be able to afford your new mortgage. Because each lender has its own mortgage calculator, it’s important to use quite a few of them. This is because you will find that each bank and building society has its own mortgage calculator for working out the size of mortgage deal you can have. A mortgage broker has access to all these mortgage calculators.
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 lenders will be willing to lend you.
There are over 90 different providers with over 14,000 mortgage products including ‘specialist lenders’. It would be advisable to get the help of a free mortgage broker who will have access to the ‘whole of market’ lenders’ calculators. These mortgage calculators will be able to work out your affordability for the monthly repayments. A fee-free broker will be able to do all the research on your behalf whilst supporting you throughout the process.
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.
Find out how much you could borrow
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 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 interest rates and lower mortgage payments.
Do lenders still use 4 x my salary to decide how much I can borrow?
Up to 4 years ago most leaders used an annual income multiplier and would lend you 4 times your salary or even 5 times your salary if they really liked you. The government stopped this and instructed lenders to use a mortgage affordability calculator. This now means that when you take out a mortgage it will be based on your present and future ability to be able to afford the monthly payments. The problem is now you have no rule of thumb to calculate how much you could borrow.
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.
You can instruct a free expert mortgage broker like YesCanDo to help you find and choose the right mortgage for you. They will provide you with a personalised borrowing amount at your best available rate. Brokers compare mortgages in a more efficient way than most comparison websites. They take into consideration the overall financial deal of the mortgage. They also compare mortgage deals from every lender to make sure you have the best deal with a trusted lender. We are also known for having an extremely high level of customer service.
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 by using a broker. A mortgage broker has access to every bank and building society and will be able to find you the lender that will lend you the most!
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 rates and best deals.
Want to achieve your best mortgage?
How do I find a mortgage broker?
Have any of your friends or family recently moved home? If they have, find out which mortgage 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 rates 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 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 their clients. This can be confirmed by reading the hundreds of Facebook and Google 5 Star reviews!
Related Mortgage Questions
Calculate your monthly mortgage payment using a quick mortgage calculator. There are many mortgage calculators available to use such as the one provided by Google. The calculation is purely just a rough guide to how much you will pay each month for your chosen mortgage rate. The exact amount will fully depend on both the type of mortgage and the chosen lender.
The areas lenders look at for your affordability is your income vs outgoings. They will stress test your financial state by checking how much money you actually have leftover after your outgoings such as utility bills, child maintenance, leisure activities and other factors. They will take this away from your basic income and any guaranteed bonuses.
You can never be too proactive so plan ahead and estimate your monthly mortgage repayments now. Following this, you will then need help putting a full plan of action together so make sure you get in touch for FREE mortgage advice.
What size mortgage can I get if I earn £30,000 a year?
When looking at your annual income, lenders will want to know if your 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 annual income is basic or is any overtime, bonus or commission. They will also want to know if you have any debts this 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.
How much do I need to earn to get a mortgage of £150,000?
Every case is looked 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 or loans.
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 to earn 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?”.
How much do I need to earn to get a mortgage of £300,000?
As mentioned before, every case is looked at on an individual basis. Mortgage lenders will look at your annual 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?”.
How much of a home loan can I get?
A home loan is another term for a mortgage. Every lender will make a decision on how much you can borrow based on your income. Unfortunately, “How much can I borrow?” doesn’t have a straightforward answer. If your income is solely a basic income then usually this will mean that you will be able to lend more. Your deposit amount will also massively make a difference. The bigger the deposit you have will increase the amount you could borrow and as well as getting you lower interest rates and lower mortgage payments. So get saving as much deposit as is possible for you and your situation. Start by writing down your income and outgoings and see what you can easily cut to start saving.
Can I purchase a buy to let property or rent my old property out?
Look no further for great buy to let mortgage advice. We are property specialists and know the recipe for a successful buy to let mortgage company and advice. Lenders calculate your investment to make sure financially makes sense. They will check your affordability and look at such things as financial commitments, outstanding loans, bank statements, current mortgage, basic salary and other income. Lenders will also take into account fees such as agent fees and legal fees and then borrow based on the overall affordability.
We always strive to provide mortgage advice that helps guide you to save money and make your buy to let rental income is an overall profitable investment
Don’t get stuck on a standard variable rate
A standard variable rate is when your fixed rate comes to an end. This is usually a much worse rate than your fixed rate and you should avoid slipping onto one at all costs.
Read our more detailed guide on why you shouldn’t be on a standard variable rate.
Who are the FCA?
All brokers are authorised and regulated by the Financial Conduct Authority (FCA).
This is for your protection and to make sure that the service and deal you get is the right one for you.