&
Choose a mortgage category to suit you and compare providers today.
This mortgage affordability calculator is free to use and doesn’t affect your credit history. It uses your income to work out a rough estimate of how much you may be able to borrow.
Firstly, you need to select whether you’re applying on your own or with another individual.
Next, you need to input your annual gross income (before tax), and the income of the second applicant (if applicable).
Note that this should be your guaranteed, regular income, not including any bonuses, for example. You can include earnings from overtime and other income streams, as long as they are regular and not an occasional extra.
After this, simply press “Calculate” to see an estimate of the amount you may be able to borrow from a mortgage lender.
It assumes that the lender will lend between three and 4.5 times your annual income.
Some lenders may be willing to offer a larger loan than this, but it’s important to remember that your income isn’t the only factor that determines how much you’ll be able to borrow.
A number of factors affect the amount you can borrow on a mortgage:
Lenders will use a multiple of your salary (or other income) to calculate the maximum amount they will lend to you. This is known as the loan-to-income (LTI) ratio.
For example, if your annual income is £40,000 and the lender has a loan-to-income ratio of 4.5, the maximum you could borrow would be £180,000.
Many lenders will have a maximum loan-to-income ratio of 4.5, but some lenders may be able to offer a mortgage that is 5.5 or even six times your annual income. It’s worth checking the criteria of individual lenders to see their specific requirements.
If you’re applying for a mortgage with someone else, such as a partner, lenders will typically use your combined income to work out the maximum mortgage size you qualify for.
Bear in mind that this is the maximum amount you may be able to borrow. Lenders will conduct further affordability checks which may affect how much they are willing to lend.
If you’re employed, this will simply be your annual salary (before tax). If you have overtime, commission or bonuses, it’s up to individual lenders as to whether they include these additional forms of income. For example, some may consider them (or a percentage of them) if they regularly form part of your income but may not if they’re paid on a more ad-hoc basis.
You will typically need to provide lenders with your payslips or other proof of income during the mortgage application process.
If you’re a freelancer or self-employed, you should use your typical earnings over the past few years. Lenders will usually require some proof of income, such as a self-assessment tax return, to help them calculate your mortgage eligibility.
You may also be able to use other forms of income, such as pensions, investments or child maintenance payments, in your mortgage application. However, this could vary between lenders and, if accepted, lenders would want to see evidence of the income you earn from these sources.
Bear in mind that, if your income is relatively unreliable and is at risk of falling, you may not be able to borrow as much as someone who is permanently employed in a stable job earning a regular salary.
It may be worth seeking professional advice if you’re self-employed or if your income situation is more complex.
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.
MAB is the preferred mortgage broker of MoneyfactsCompare
Get friendly, expert advice free of charge as a visitor of MoneyfactsCompare
Mortgage Advice Bureau have 1,600 UK advisers with 200 awards between them.
Speak to an award-winning mortgage broker today.
Call 0808 149 9177 or request a callback
Mortgage Advice Bureau offers fee free mortgage advice for MoneyfactsCompare visitors that call on 0808 149 9177. If you contact Mortgage Advice Bureau outside of these channels you may incur a fee of up to 1%. Lines are open Monday to Friday 8am to 8pm and Saturday 9am to 1pm excluding bank holidays. Calls may be recorded.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Applying for a joint mortgage could improve your affordability as the lender won’t base its decision solely on your income.
Lenders will typically use the combined income of both applicants to determine how much you could borrow on a mortgage.
For example, if you earn £40,000 and your partner earns £45,000, your combined income is £85,000. If a lender could lend up to four times your income, you may be able to borrow up to £340,000 together, compared to a maximum of £160,000 if you applied alone.
However, it’s important to consider the risks of applying with another individual. For example, if they have a bad credit history, this is likely to affect the mortgage deals and interest rates you qualify for.
Furthermore, a joint mortgage means you are both legally responsible for paying off the mortgage and your credit scores will be linked, so it’s important to only apply with someone you can trust.
There’s no fixed credit score you need to get a mortgage. It’s also worth remembering that you don’t have one single credit score; there are three main credit reference agencies in the UK which each have their own method of scoring. Mortgage lenders may use one or more of these agencies for their credit checks.
Having a better credit history is likely to help your mortgage application as it indicates to lenders that you can be relied upon to make payments in full and on-time. As a result, you may be able to borrow more or qualify for lower interest rates.
However, having a less-than-perfect credit score or a bad credit history won’t necessarily stop you from getting a mortgage. As well as your credit history, lenders look at your overall financial situation, particularly your income, to make a decision on your application. There are also lenders that may specialise in offering mortgages to those with poor credit.
But, if you do qualify for a mortgage with a poor credit score, you may not be able to borrow as much as someone with a better credit history and you are likely to be charged a higher rate of interest.
All mortgages require some form of deposit, but it isn’t directly linked to how much you could borrow.
It may be possible to secure a mortgage with a deposit that covers just 5% of the property’s value, but ideally you want to put down as big a deposit as possible to reduce your loan-to-value ratio.
The loan-to-value, or LTV, is the amount you need to borrow on your mortgage divided by the price of your property. For example, if you have a £100,000 deposit for a property worth £400,000, you will need a mortgage to cover the remaining £300,000, meaning your LTV is 75%. You can work out your LTV using our LTV calculator.
A bigger deposit means you need to borrow a smaller sum, so reducing your loan-to-value.
A lower LTV means you may be eligible for a wider range of mortgage deals at lower rates of interest.
LTV bands are usually set at 5% intervals, such as 90%, 85%, 80%. You can move into a lower LTV band by increasing the size of your deposit, as this will allow you to secure a smaller mortgage in relation to the value of your property.
If you can’t afford a larger deposit, the only other way to move into a lower LTV band is to buy a cheaper property. This would mean your deposit takes up a higher proportion of the property’s value and would reduce your LTV accordingly.
Alternatively, you could search for less expensive properties so you would need to borrow a smaller sum from the mortgage lender.
Loan-to-value can have a significant impact on interest rates, so it’s worth seeing if you could drop into a lower LTV band. For example, the most competitive mortgage rates are usually reserved for mortgage deals with a maximum LTV of 60% while those at 90% and 95% LTV are more expensive.
Use our LTV calculator to work out your current loan-to-value.
You may be able to borrow more on a mortgage by:
If you can’t borrow the amount you need with a standard mortgage, it may be worth considering one of the following specialist mortgages.
These mortgages work by adding a guarantor to your mortgage agreement. The guarantor agrees to repay your mortgage if you are unable to, which could improve your chances of getting a mortgage from a lender.
Bear in mind that not all lenders offer these mortgages. It’s worth seeking advice to understand the risks and to see if it’s suitable for you.
The Government-backed shared ownership mortgage scheme allows you to buy a share of a property (between 10% and 75%). You then pay rent to the organisation which owns the rest of the property, which is usually a local housing association or the property developer.
This scheme is only available to certain buyers and on certain properties. It won’t be right for everyone, so get advice if you’re thinking of this type of mortgage.
Some lenders may offer joint borrower sole proprietor mortgages, which allow borrowers to add the income of a close family member to their mortgage application. This could help the borrower access a larger mortgage.
The property will remain solely in the borrower’s name, but the relative(s) acting as a joint borrower will be named on the mortgage agreement and will be equally responsible for making payments.
If you’re a first-time buyer, lenders may have their own specialist mortgage products designed to help you get on the property ladder.
You can work out your loan-to-value, based on how much you need to borrow and the price of the property you want to purchase, by using our LTV calculator.
Once you have an idea of how much you could borrow, you may be interested to see how much you would need to repay each month. You can find this out on our mortgage repayment calculator.
When you move home, you may need to pay Stamp Duty Land Tax. You can work out how much you may need to pay with our stamp duty calculator.
All of our newsletters are available free by email to all Moneyfactscompare.co.uk users.
Send me Weekend Moneyfactscompare, Savers Friend, and Companies Friend.
