Sometimes taking out a joint mortgage could increase the amount you can borrow, especially if you both have well-paid jobs. You can head to our Joint Mortgages page to find out more.
However, mortgage affordability is subject to lots of different things, such as your credit history, monthly outgoings and deposit, and it can also vary from lender to lender.
Our mortgage borrowing calculator will provide you with an approximation of how much you’re likely to be able to borrow, however it’s important to make sure you can afford the monthly repayments not just now, but in the future. For more help you can speak to our team for free mortgage advice. They can run through your circumstances to give you a more definitive idea of your mortgage loan eligibility.
Published 09 November 2022
Mortgage affordability is the term used when lenders assess whether you can make the monthly repayments on the amount you’re borrowing. They need to take into account multiple factors here - as you can imagine, assessing affordability isn’t a straightforward process.
Lenders will consider things such as your age, job type, how much you earn, and how much you spend every month. They’ll then look at the total amount you’re borrowing to work out whether you can afford to pay it back both at the current rate and if rates were to increase in the future.
Not sure how much your mortgage is going to cost you? Use our mortgage repayment calculator to get a better handle on the payments you’re likely to face, and if you’re wondering “how much mortgage can I afford”? Use our mortgage affordability calculator to get a better idea of how much you’re likely to be able to borrow.
There’s no need to be worried about the mortgage underwriting process - you just need to know what it involves, so you can be prepared for it.
You’ll be asked to provide proof of your income, usually payslips for the last three months, as well as any other income you receive such as benefits, part-time jobs or child maintenance payments.
Getting a mortgage as a self-employed person needn’t be a struggle as long as you can provide proof of your income for the last two full tax years. Self employed mortgage requirements typically mean lenders will ask for 2 years’ accounts or tax returns to demonstrate how much you earn, although some lenders may consider one year’s accounts depending on your situation.
You’ll also need to show your outgoings in the same way as an employed applicant, including things like credit commitments, Council Tax and energy bills. If you’re looking for a self-employed mortgage loan, it’s worth making sure your accounts and tax returns are up to date as soon as possible.
Regardless of your employment status you can also expect your lender to look into your credit history, and any bad credit, late payments or outstanding loans could have an impact on the amount you’re able to borrow.
The process for affordability checks can take anywhere from two to six weeks, but you can minimise delays and ensure that you provide the correct paperwork by applying through a mortgage broker like L&C. We can also help to find the best match for your circumstances, including self-employed mortgage lenders.
To ensure you have the best possible chance of obtaining mortgage approval, make sure that you check your credit report before starting the mortgage application process. When reviewing your report, which can be done for free via credit reference agencies like Experian, make sure there’s no incorrect information, as any discrepancies - no matter how small - can adversely affect your mortgage application.
You should also try and save as big a deposit as possible, but if you are a first time buyer or finding it difficult to save up enough for a big deposit, there are options available to you. You could look at schemes like shared ownership or shared equity, or a guarantor mortgage where a friend or family member agrees to meet your monthly repayments if you can’t. Use our mortgage loan calculator to work out how much you might need to borrow and what deposit you need to save.
To figure out how much deposit you need it’s helpful to know what ‘loan to value’ (LTV) means, so the size of mortgage in relation to the value of the home you want to buy. The lower your LTV, the wider range of mortgages are available to you. Use our LTV calculator to work out your loan to value and find out which mortgages are available to you.
The first step to securing a mortgage is getting an Agreement in Principle (AIP). This is essentially an agreement ‘in principle’ that a lender is happy to give you a mortgage for a specified amount. It’s not necessary for house hunting, but it can help to show sellers that you’re serious.
Our in house mortgage calculator is a good start to work out how much you can borrow, but if you’re ready to get your AIP you can get started with our Online Mortgage Finder. As a mortgage broker, we offer free mortgage advice to help you secure the right mortgage for your personal circumstances, no matter whether you’re looking for a mortgage on your own or as a joint application, or are employed or self-employed.
The amount you can borrow will vary between lenders, but - assuming you pass affordability checks - most lenders allow you to borrow up to between 4.5 and 5.5 times your annual salary. That means that if you earn £30,000, you may be able to get a mortgage of around £150,000. Some lenders offer mortgages up to 6 times your salary but this tends to be limited to certain products or professions. Bear in mind that, as well as your salary, lenders will take other factors into account such as your monthly spending, your deposit size, your age, and what type of employment you’re in.
If you’re buying a property that needs renovation, you might be wondering whether you can take out an additional amount on your mortgage to cover the work that needs to be done. Unfortunately, lenders base their mortgage offers on lower of the purchase price or current value of the property. If you have a large deposit you may be able to hold some of that back to carry out the work and borrow more on your mortgage, but generally lenders will not lend more than 90-95% of the current value.
All lenders will do an affordability assessment before offering you a mortgage and it’s calculated using a variety of different factors. Firstly, a lender will look at your income - and if you’re buying with someone else, they will also take their income into account, as well as your outgoings to make sure that you can afford the monthly repayments. This includes things like your credit card and loan payments, bills, child care costs, groceries and personal/leisure spending. Lenders also look to understand whether you’ll be able to keep up payments should your circumstances change, such as if you lost your job, you’re prevented from working due to illness, you take a career break, or your mortgage interest rate increases. You can use our calculator to get a quick idea of how much you might be able to borrow, based on your circumstances or you can use our Online Mortgage Finder to get a more accurate result.
We've got lots of useful mortgage calculators to help you find out more about how much you can borrow, what it will cost, what fees will be involved and what else you should consider.