UK Mortgage Affordability Calculator (2024)

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How Much Can I Borrow

Before you start looking for your dream home, you need to know how much you're able to borrow in order to fund it. Generally, how much you can borrow will depend on four things. The amount you want to borrow in relation to the property's value (also known as the loan-to-value or LTV), your credit score, your income and your outgoings.

You should be able to comfortably afford the mortgage when you take it out so that unforeseen events (such as interest rate rises or redundancy) don't put your home in jeopardy later on.Remember, although the lender or mortgage broker is responsible for checking whether you can afford a particular mortgage, making sure you can easily manage the repayments you're taking on will give you valuable peace of mind before you apply.

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.

Speak to an award-winning mortgage broker today

Your credit score has a big part to play in how much you can borrow. In the most extreme cases a low credit score could prevent a mortgage lender from even considering you or, more likely, a low score could mean that the lender uses a lower multiple of your income to decide how much you can borrow.

That’s why you’ll want to make sure your credit score is up to scratch before you even consider applying for anything. Our guide on improving your credit rating will be able to help you with this.

Concerned about the cost of living crisis?

Income is crucial for determining how big a mortgage you can have. Traditionally, mortgage lenders applied a multiple of your income to decide how much you could borrow. So, if you earn £30,000 per year and the lender will lend four times this, they may be willing to lend £120,000. (Remember that each lender will have different criteria and will offer different income multiples, so always do your research.)

When it comes to households with two incomes, some lenders offer a choice:

• The option to add the second income on top of the multiple, so if the main breadwinner earns £30,000 and the second person's income is £15,000 a lender might offer 4x the first income, plus the second income (4 x £30,000 + £15,000 = £135,000)
or

• A slightly lower multiple for two incomes than for one. So £30,000 + £15,000 = £45,000. Then £45,000 x 3 = £135,000

Many lenders now only use income multiples as an overall maximum that they will lend, conducting a detailed affordability assessment to decide how much they are willing to lend. This is something that has become particularly strict following mortgage regulations introduced in 2014.

If part of your income is comprised of a bonus or overtime, you may not be able to use this, or if you can, you may only be able to use 50% of the money towards what the lender deems as your income. All income you declare in your mortgage application will need to be proven – usually through you providing your latest pay slips, pensions and benefits statements.

Could a specialist mortgage support your plans?

Your regular household expenses, debts and insurances can all affect what a mortgage lender will let you borrow. Outgoings that a lender may take into consideration include:

• Loan and credit card repayments
• Council tax
• Domestic utilities (gas, electricity and water)
• Insurances (buildings and contents, car, life, payment protection)
• Car running costs (tax, insurance)
• Child maintenance payments

Some lenders also apply a reduction to the amount you can borrow for the number of children you have (assuming an average monthly expense), while others have started to take things like discretionary spending into account. They'll also require you to prove that you can afford the repayments in the event of an increase to interest rates, so make sure you have suitable means to ensure that – ideally through reducing your unnecessary expenditure – as this could have a clear impact on the amount of mortgage you'll be able to borrow.

When it comes to households with two incomes, some lenders offer a choice:

• The option to add the second income on top of the multiple, so if the main breadwinner earns £30,000 and the second person’s income is £15,000 a lender might offer 4x the first income, plus the second income (4 x £30,000 + £15,000 = £135,000)
  or
• A slightly lower multiple for two incomes than for one. So £30,000 + £15,000 = £45,000. Then £45,000 x 3 = £135,000

Many lenders now only use income multiples as an overall maximum that they will lend, conducting a detailed affordability assessment to decide how much they will actually let you borrow. All income you declare in your mortgage application will need to be proven, usually through you providing your latest pay slips, pensions and benefits statements.

Lenders need to show that the mortgage is affordable and that you could continue to pay your mortgage should there be a rise in interest rates, or you have a significant change in circ*mstances such as losing your job or having a child.

Lenders also have regulatory restrictions that limit their new lending above 4.5x salary to a maximum of 15% of all new mortgage loans. This means lenders can be very specific in deciding exactly which borrowers they want for these mortgage deals.

To find out more take a look at our What are mortgage affordability checks guide.

This depends on both how regular your overtime is and the attitude of the lender concerned. Some lenders will not consider any additional income you may receive through overtime, while others may accept all or 50% of this income. Any earnings from overtime to be included as part of your mortgage application will need to be regular or guaranteed and be evidenced.

If however overtime is something you only get occasionally then the lender may not take it into account at all. This is where a mortgage broker can help – they will know which lenders are more likely to accept overtime as part of their income calculations.

Knowing how much you may be able to borrow is one thing, but knowing how much you can comfortably afford – and being confident in your ability to keep up with your repayments – is another. This is why you’ll need to carefully go through your outgoings, making sure to use a mortgage repayment calculator so you get an idea of what your repayments could be and whether you could absorb them in your current salary.

Bear in mind that if you’re moving to a bigger property there could be additional expenses to pay, and if you’re moving from rented accommodation into homeownership, your outgoings could change again, and that’s before we even get to the additional costs of moving (legal fees, stamp duty, conveyancing etc.). This means it’s vital to go through everything in advance to make sure you’re prepared for the impact on your finances.

Once you’ve tallied everything up, you can make a decision about the kind of mortgage you can comfortably afford. Though make sure to be realistic – it’s generally recommended that no more than 28% of your household income should go on housing expenses, so if your final total is above this level, it may be worth reconsidering.

Our mortgage calculator can help you determine how much you might be able to borrow based on your salary. Just input your annual income and guaranteed overtime – together with that of the second applicant, if you’re applying for a joint mortgage – and you’ll be shown the minimum and maximum you may be offered. Remember though that income isn’t the only factor lenders will take into account when determining how much you’ll be able to borrow, so this should purely be used as a guide.

Once you have an idea of the maximum amount you’ll be able to borrow, you can start to compare different mortgages Our mortgage charts allow you to search for a mortgage based on your circ*mstances, giving an overview of the products available and helping you narrow down the options. You may want to speak to an independent broker for a more personalised look at the products available, too.

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