It’s the big question for home hunters – how much can I borrow? And it’s not one with a straightforward answer, as the amount you can borrow for a mortgage depends on a number of factors – from your income to how much deposit you can put down.
To work out how much you can borrow, the main factors mortgage providers tend to look at are:
Income – Your salary plus any other income from pensions or child maintenance support.
Expenses – Any outgoings you have like credit cards, insurance, bills or loan payments.
Living situation – If you’re self-employed, on maternity leave or don’t earn regular income.
This page will guide you through how these factors are used to decide your loan terms and the borrowing levels you can access. How much you can borrow might change due to your circumstances at a later date, for example if you have children or a change in career.
Estimate how much you could borrow
We can help give you a rough idea of how much you could borrow with our mortgage calculator. It’ll also help you to find out the potential cost of your monthly repayments. To get started, you’ll need your:
Annual income – How much you earn per year.
Monthly commitments – What you spend on bills, loans or anything else.
Mortgage term – How long you want to pay off your mortgage.
Property value – Roughly what your home is worth.
Deposit size – The amount of deposit you’ve saved up.
Our mortgage calculator is for illustrative purposes only and isn't a mortgage offer.
Find out how much you could borrow and compare monthly payments to find the right deal for you.
You could lose your home if you don’t keep up your mortgage repayments
How does LTV affect how much you can borrow?
A big part of the mortgage application is your loan to value ratio – or LTV. This is a figure which shows the mortgage loan as a percentage of the property value.
For example, if you are buying a house worth £200,000 and your deposit is £20,000, your LTV would be 90%.
The lower the LTV, the better mortgage rate you might be offered. For instance, you might get a lower interest rate if you had an LTV of 75%, compared to someone with an LTV of 95%.
LTV isn’t the only factor lenders will think about when offering you an interest rate, however.
The basics of paying for a mortgage
Making a budget is a great idea when you’re thinking of buying a house. Working out what you can afford to pay each month on your mortgage repayments can help you decide how much you want to borrow – and which home you can afford.
Ask yourself these questions:
How much money will you have after your monthly payments?
You’ll have to factor in living expenses like food, monthly bills, childcare and any money you spend on transportation or car repairs and insurance. Work out your complete outgoings to find out how much you could afford to pay in monthly mortgage repayments.
It’s also nice to have spare cash for social occasions, treating the family or to save every month. Think about how much per month you’d want to spend on this.
Are financial commitments affecting your budget?
If you have any credit card bills, student loan repayments or direct debits, consider these when budgeting. It’s also worth including things like regular commuting costs when you’re working out what you can afford every month.
How much money will you need to pay for moving?
The cost of moving home can be more expensive than you think. Removal firms, storage space and travel expenses all mount up. You’ll pay this on top of your deposit, so make a rough estimate of your moving costs when you’re looking to get a mortgage.
How much deposit can you save?
A bigger deposit can give you a better chance of securing a lower interest mortgage deal.
You should work out what you can afford to save each month and whether the money you have now is enough for a sizable deposit. Find out more about how to save for a mortgage deposit.
Could any government schemes help?
Government schemes – like shared ownership mortgages – could help lower your costs. This is where you buy a share of your property, then pay rent on the rest. This could help if you’re a first time buyer.
Lots of factors are taken into account when you apply for a mortgage. This is called an affordability assessment, and covers:
Your annual salary indicates how much money you earn each month. If you have a higher income, then you can likely borrow more money.
How your living situation affects your finances could also impact the deals you’re offered. For example, if you’re looking to get a mortgage with your partner or by yourself. Whether you have children is also a consideration.
Whether you’re on a regular salary or your income comes from irregular contract work can affect the amount you’re offered. Being self-employed can also affect this.
Current and past loans
Credit card bills, student loans or other types of borrowing are also taken into account. If you have less loans against your name, you could get a better rate.
A credit check is carried out during a mortgage application. This looks at factors like:
Your track record of repaying bills on time.
Being registered on the electoral role.
Making regular repayments to a credit card.
Loans and loan applications.
Bills and missed payments.
Debt management plans.
County court judgements.
These can affect whether you’ll be accepted for a mortgage, the type of deal offered and how much you can lend.
The larger the deposit, the better deal you’ll usually be offered due to a better LTV ratio.
This may be surprising, but being registered to vote is also checked during the application process. Being on the electoral roll is a way for providers to check your identity and the information you’ve provided is correct.
The content on this page is for reference and does not constitute finance advice.
For impartial financial advice, we recommend government bodies like the MoneyHelper.