How much can I afford to borrow?

20 October 2021

If you are looking to purchase a property, you may be wondering how much you’ll be able to borrow on your mortgage. 

David Lauder, an Independent Mortgage and Protection Adviser, looks at some key factors mortgage lenders will consider when deciding how much they will let you borrow to buy your new home. 

Income

In the past, how much you were able to borrow was set by income multipliers of approximately three or three and a half times your income. Nowadays, there is a more ‘common-sense approach’, where different lenders will lend different amounts, based upon your individual circumstances. 

Deposit 

Lenders factor in how much deposit you can pay. If you can provide a bigger deposit, the lower-risk you are and therefore, you may be allowed to borrow a little extra, due to the commitment you have shown with the level of deposit.

Credit Score

Your credit score, which is measured by your financial conduct, is also influential in determining how much you can borrow.

Affordability

Affordability is another key factor in assessing how much you are able to borrow; how much can you afford to pay on a monthly basis?

This will be based on your income minus your monthly commitments, such as regular loan repayments, car finance, credit card balances, and for some providers, childcare costs may be taken into consideration.

These factors can reduce your borrowing potential, especially when compared against someone with the same income who does not have these commitments, as there is a surplus available for a mortgage repayment.

They may also assess your bank statements to see evidence of how you conduct your day to day finances, this will give them an idea of your financial habits.

Get Independent Mortgage Advice

When it comes to a mortgage, no two cases are the same, different providers will assess your circumstances different ways to decide how much they will lend you.

Work with independent mortgage brokers who have the knowledge to analyse and advise which providers will look most favourably at your circumstances, but also ensure that any mortgage commitment is affordable, so that not only are they helping you buy a home, but also helping you keep it.