This calculator is intended to give an indication only.
Before you start looking for that dream home, you need to know how much you're able to borrow in order to fund it. That way, you can search accordingly. Generally, how much you can borrow will depend on four things:
1. The amount you want to borrow in relation to the property's value (also known as the loan-to-value or LTV)
2. Your credit score
3. Your income
4. Your outgoings
But really, the question should be: “How big a mortgage can you afford?” Although the lender (and mortgage broker if you use one) is ultimately responsible for checking whether you can afford it, making sure you can easily manage the repayments you're taking on will give you valuable peace of mind.
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. Sometimes your feelings on how much you can afford can be at odds with a lender's, so make sure you know what a lender looks for to avoid the frustration of not getting the mortgage you want.
Our mortgage calculator helps you to see how much your mortgage might cost you each month.
Understanding roughly how much you can comfortably borrow is a central requirement of property hunting. It’s no good looking at houses which are on the market for £400,000 if the most you can borrow from a mortgage lender is £150,000. Hence using our mortgage calculator can give you a broad indicator of how much you might be able to borrow and so whether the type of home and location you are hoping to purchase in will be available to you
The How much can I borrow calculator is simple and easy to use. Firstly, you’ll need to select how many people are applying for the mortgage – so if you are looking to buy on your own then the answer is one, however, if you plan on a joint mortgage with a partner the simply select two. Depending on your answer to this you will be asked to provide either just your income or that of you and your partner.
Pressing calculate will generate the results of your how much can I borrow query. The figures given should be considered a guideline only – the actual sum that a lender will be willing to advance is very much down to the individual mortgage provider, your income and individual factors that the lender will take into account. However, it is likely to fall into the broad range outlined in our calculator.
All mortgages require some form of deposit, but they are not directly linked to how much you could borrow. The loan to value or LTV of your mortgage, means how much the mortgage is in relation to the value of the property. So, if you have a £50,000 deposit for a £200,000 property, the mortgage you need would be £150,000 – 75% of the property's worth, or 75% loan-to-value.
Mortgage lenders will specify an upper LTV limit for each of their mortgage products. This does not mean that you will necessarily be able to borrow this amount – that will depend on your credit score, your income and your outgoings.
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 should be able to help with this.
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)
• 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.
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.
At this point it's worth mentioning the value of an independent mortgage broker . Because brokers work closely with a number of different lenders, they know the ins and outs of the different lending criteria each mortgage provider has. This has a distinct advantage over doing it yourself as it can save you time, as well as money if a mortgage lender later declines to give you the mortgage you want.
If you would like expert advice from a qualified mortgage adviser, you can arrange a telephone appointment with our preferred mortgage advisers, who will offer personalised advice to help you get the right mortgage for your needs.
Understanding roughly how much you can comfortably borrow is a central requirement of property hunting. It’s no good looking at houses that are on the market for £400,000 if the most you can borrow from a mortgage lender is £150,000. Hence using our mortgage calculator can give you a broad indicator of how much you might be able to borrow and so whether the type of home and location you are hoping to purchase in will be available to you
It is possible to borrow five times your salary but only if you meet the lenders affordability tests and requirements for loan-to-value and minimum salary. To get a mortgage of this scale, you’re likely to need a deposit of at least 10%, if not more to have access to a wider range of mortgage deal and may face a maximum lending cap. Some borrowers may look to lengthen their mortgage term to thirty years help make monthly payments more affordable.
Prior to 2014 lenders would use an income multiplier to help decide how much you could borrow on a mortgage. Now 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 circumstances 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.
The answer to this varies from lender to lender, but most importantly a lender will be more concerned about how much you can afford to pay back. In addition, lenders will also want to consider your personal financial position, including obvious things such as your current level of debt, credit history and employment details.
In general lenders will limit their lending to 4.5 times and below income due to regulatory restrictions on lending above this.
Our calculator shows how much you could borrow at different salary levels, for example:
• For a £100,000 mortgage you will need to earn at least £22,500 as a single applicant or between you if applying for a joint mortgage.
• For a £250,000 mortgage you will need to earn at least £56,000 as a single applicant or between you if applying as a couple.
• For a £500,000 mortgage you will need a earn at least £111,500 as a single applicant or as joint income for a shared mortgage.
Once again, this depends on the lender and their lending criteria. If you are in doubt as to whether you earn enough to get the mortgage you require then an independent mortgage broker can give you an honest and unbiased idea based on their knowledge of the current market and the lenders within it. As with most financial products there are lenders out there who are happy to consider applications for non-standard mortgages. Again, a mortgage broker can help you find the best deal.
The golden rule is always that you can genuinely afford the mortgage rather thin stretching yourself too thin financially.
Once you have an idea of what maximum value you’ll be able to borrow, you can start to compare different mortgage products. Our mortgage charts allow you to search for the mortgage based on your circumstances.
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This guide helps you to understand and prepare for mortgage affordability checks.
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