How much can I borrow
How much can I borrow?
The amount that can be borrowed is, of course, at the lender’s discretion. But there are rough guidelines.
Typically the amount lent may be up to three and a half times the main earner’s annual income before tax, plus one times any second earners annual income, or alternatively two and a half times their joint incomes if this is larger. Though remember different lenders may have different criteria.
Some lenders have moved towards affordability measures that take into account other circumstances such as other debts or whether the borrower has dependents.
How much can I afford?
It is worth noting that interest rates can rise so it is best not to borrow up to the limit of the amount you can borrow, otherwise you could quickly end up having a mortgage that you can’t afford to repay.
Calculate how much household income you have and subtract what you spend. Ignore any payments that would stop if you owned your own home (rent etc) but include any new costs (rates, travel costs, insurances etc). You need a reasonable idea of your monthly income and expenditure in order to estimate what your mortgage budget is.
Use our free online mortgage calculator to work out the effect of interest rate fluctuations. If the interest rate were to rise, then you should know how much your repayments would increase by.
Get detailed information from lenders before agreeing to a specific mortgage.
The information on this site is intended to be generic information and is not advice. If you need advice in relation to your mortgage needs, you should consult a professional mortgage advisor.