Buying a property is a big step involving a substantial long-term financial commitment, so think hard about what you can afford. You will need to consider the assets you have – like savings, which you might be able to use for your deposit – as well as the money that’s coming in and going out.
You don’t want to commit to a mortgage and then realise you can’t afford some of the nicer things in life. It may sound obvious but take the time to make a note of all the things you spend money on throughout the year, even without a mortgage. This will help you to stay well within your means and less likely to overstretch your finances.
If you’re a first-time buyer, your assets will be savings, investments and anything else you can turn into cash quickly. If you own the house you’re currently living in, that too will be an asset, even if you haven’t paid it off fully.
How much might I be able to borrow with a mortgage?
Every lender has different ways of calculating how much they will lend to you, or even whether they will lend to you at all. It includes criteria such as your income, the size of your deposit, your regular expenditure, and your credit rating. These will be considered for both of you if you’re making a joint application.
But you can start by getting a rough idea of how much you could borrow by using our mortgage calculator.
Actual loan amounts and affordability criteria will differ across lenders. Make sure you obtain accurate figures from your lender before committing to any mortgage. Your home may be repossessed if you do not keep up repayments on a mortgage.
Helping you get an affordable mortgage
The current rules around mortgages were put in place to help make sure that customers only borrow what they can comfortably afford. So, when it comes to applying for a mortgage, you’ll have to go into a lot of detail about your income and spending. Ultimately, this is for your benefit, as the lender will want to supply you with the most appropriate product they can.
Want a more accurate estimate?
You can speak to a lender or mortgage adviser. They can take a look at your situation and go through what you might be able to borrow. You could also apply for a Mortgage in Principle which outlines the size of mortgage you could get.
Are you self-employed?
There are often more questions lenders like to ask if you’re self-employed. So, you might like to speak to a mortgage adviser or lender to get an indication of what you could borrow, and how much the repayments might be.
Investing in a buy-to-let property?
Again, there are a few different things to consider, so speaking to a mortgage adviser or a lender might be a good way of getting an accurate estimate.
How much will I have to repay per month?
The total sum of what you can borrow isn’t the only factor to consider. You should also be aware of how much your mortgage might cost you every month – so you can be sure you can comfortably afford it.
Consider all possibilities
When you’re working out what you can afford, remember that the unexpected can happen and things can go wrong. We all have different levels of comfort with our spending limits, so think through different scenarios and what you’re comfortable with.
A mortgage adviser or lender can talk through your options in the event of redundancy, serious illness, or even death.
