Find out how much you can afford to borrow for a mortgage and how much house you can afford without over-stretching yourself or committing to repayments that you can’t meet.
When buying a home, often the first step is understanding how much can you afford to borrow for a mortgage. Most people want to buy as much house as they can afford, without being overstretched or with too little money to pay the monthly bills.
When deciding how much can you afford to borrow for a mortgage, you’ll need to take a number of factors and costs into account, including:
Understanding these points will help you calculate what additional costs you’ll incur when you move, how much money you need to maintain your desired lifestyle, and how comfortable you are to stretch yourself financially.
Our how much can I borrow for a mortgage calculator is a good place to start to see how much you can afford to borrow for a mortgage. It looks at how much you are likely to be able to borrow and afford based on your income.
And our mortgage cost and repayment calculator will give you an idea of what your monthly mortgage costs are likely to be.
While online calculators are helpful in giving you a rough idea, you can find out exactly what you can borrow by speaking to our fee-free mortgage broker partners at L&C. They can give you no-obligation mortgage advice and set out your options today, for free.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Lenders usually let you borrow up to between 4.5 and 5.5 times your salary. But lenders must also assess the monthly payment you can afford, after considering your outgoings as well as your income. This is called an affordability assessment.
Lenders will also assess whether you could keep up with your repayments if things change, such as if interest rates increase or if your income changes.
In terms of how much deposit you need, you’ll usually need at least a 5% deposit. But the bigger the deposit you have, the bigger the choice of mortgages you will have and you’ll usually get access to better first time buyer mortgage rates.
To work out the size of deposit you’ll be able to save, the first step is to draw up a household budget so that you’ll understand how much money you have at your disposal to pay for everything.
The size of deposit you’ll be able to save depends on:
Once you’ve added these amounts together, you need to deduct any costs of buying a home, moving and renovating, as well as the savings safety-net you want to keep (you will need to have some savings after you move, in case of emergencies). The final sum is the amount you have available as a deposit that you feel you can afford to put down towards the cost of your home.
Typically, most lenders offer mortgage deals which require at least a 5% deposit to buy a house. A 5% deposit means you’ll need to get a 95% loan to value mortgage. A lot of lenders prefer a 10% deposit and having a larger deposit means you can access lower mortgage rates, making your monthly payments more affordable.
However, it’s possible to buy your first home with no deposit by taking out a 100% mortgage, such as Skipton Building Society’s 100% Track Record mortgage or by taking out a guarantor mortgage with help from your parents or a relative. We explain all your options and what to consider in our guide on how to get a mortgage with no deposit.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Once you’ve calculated how big your deposit is, you’ll be able to work out how much are able to borrow for your mortgage depending on:
Lenders typically lend up to 4.5 times your income, although this will depend on your circumstances. You may find it harder to get a self-employed mortgage in the UK if your income fluctuates a lot, you don’t have two years of business accounts, a lender has doubts about your business’s long-term viability or if you approach the wrong lender. Getting self-employed mortgage advice from a fee-free mortgage broker means you’ll know which lender is most likely to accept your application.
There are other costs involved with buying a house that you need to make sure you can afford including:
The amount you can afford to spend on a house will take into account how much capital you have to play with and how much you can borrow from a mortgage lender (both being your total home-buying budget). The total amount of money available to you needs to cover the total cost of buying your home. If not, you will need to scale back your ambitions – or find some more money. But being able to afford to buy your new home is only the first step – to avoid repossession or mounting debts, you need to be able to afford to live in it.
Compare today’s best mortgage deals to find out how much you can afford to borrow.
Once you have decided the rough size of the mortgage you are going for, you should find out what the rough monthly costs would be, which will depend on the type of mortgage. It’s important to ask yourself:
Once you have shopped around for the best mortgage offer, see if you will qualify by getting a mortgage in principle, sometimes called an agreement in principle (AiP) or decision in principle (DiP). It’s a statement from a lender on how much they would lend you ‘in principle’ based on information you have provided about your income and outgoings.
You can get a Mortgage in Principle in just a few minutes with our Mortgage Finder powered by the mortgage experts at L&C. This allows you to check your eligibility against a wide range of lenders’ criteria to see which deals you qualify for, how much you can borrow and what it will cost. You can then click ‘submit’ to receive an online Decision in Principle certificate, which will typically last up to 90 days.
When you make an offer on a house and it is accepted you need to make your full mortgage application. Read our guide How to make a successful mortgage application.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
If a lender has refused to give you a big enough mortgage or you’ve had an application for a mortgage declined, don’t just apply for another mortgage elsewhere – if you get declined again this will leave a mark on your credit file.
Start by asking the lender why they declined your application. Then speak to a fee-free broker for mortgage advice; they know the mortgage market and may be able to match you to a lender that will lend you the right amount. And if the lender who declined your application doesn’t give a reason why they rejected you, a mortgage broker can assess your previous application and work out where you went wrong.
If the broker advises you that it’s unlikely that you’ll be able to borrow as big a mortgage as you’d hoped, while this may be frustrating, it’s in your best interest to ensure that you’re not financially overstretched because you don’t want to have your home repossessed in the future.
A good rule of thumb is that no more than 35 per cent of post-tax income should go on mortgage payments. However, on average, homeowners with mortgages paid approximately 17.8% of their income on mortgage in 2023, according to research by Statista. But don’t get hung up on what percentage of your income should go on your mortgage as this will be different for everyone. The key thing to consider is that your mortgage must be affordable for you.
Don’t just go to your bank for a mortgage, always shop around so that you know you’ve got the best mortgage deal. The easiest way to do this is by using a fee-free mortgage broker. Not only will they scour the market for the best mortgage deal for you but they’ll also match you with a lender that’s most likely to accept your application.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
The amount you should spend on a mortgage will vary depending on circumstances. If your outgoings are low and you’re happy to take on the risk of a larger amount of debt, you may be happy taking out the biggest mortgage a lender offers you. Alternatively, you may prefer to be more cautious in the amount you borrow to keep your mortgage payments as low as possible.
If you have bad credit you may need a bigger deposit and you may not be able to borrow as much. But this will depend on your circumstances including what your credit issues were and how recent they were. Find out more in our guide on Bad credit mortgages.
The salary you need to afford a house depends on the price of the house you want to buy. As lenders generally offer up to 4.5 to 5.5 times your annual salary, if you earn £50,000, you may be able to borrow up to £275,000 on a mortgage. If you’re buying with someone else their income will also be taken into account.
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice.
Mortgage service provided by London & Country Mortgages (L&C), Unit 26 (2.06), Newark Works, 2 Foundry Lane, Bath BA2 3GZ, authorised and regulated by the Financial Conduct Authority (FRN: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
HomeOwners Alliance Ltd is an Introducer Appointed Representative (IAR) of Seopa Ltd, for home insurance, authorised and regulated by the Financial Conduct Authority (FCA FRN: 313860).
HomeOwners Alliance Ltd is an Introducer Appointed Representative (IAR) of LifeSearch Limited, an Appointed Representative of LifeSearch Partners Ltd, authorised and regulated by the Financial Conduct Authority. (FRN: 656479).
Independent Financial Adviser service is provided by Unbiased, who match you to a fully regulated, independent financial adviser, with no charge to you for the referral.
Bridging Loan and specialist lending service provided by Chartwell Funding Limited, registered office 5 Badminton Court, Station Road, Yate, Bristol, BS37 5HZ, authorised and regulated by the Financial Conduct Authority (FRN: 458223). Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.