How much mortgage can I borrow?
By far the most common question we get asked is 'how much mortgage can I borrow?' - and it's not surprising, as the answer to that question will determine what kind of house you can afford to buy.
In this post, we're going to talk about the main factors that companies will look at when it comes to calculating how much they're prepared to lend you for your mortgage.
Your household income will be one of the biggest influencers when it comes to how big a mortgage you can get.
Companies may lend you up to three to five times your income, depending on your circumstances and other factors such as the ones below.
However, it's worth considering borrowing less than this so as not to risk over-committing yourself financially. Try to leave yourself a buffer to allow for changes in your circumstances such as starting a family or being made redundant.
Companies are obligated to lend responsibly and to make sure that they don't leave people with mortgages that they simply can't afford to pay back.
For that reason, they'll look at things like your bank statements, to assess your living expenses and they'll use this information to help them decide how much mortgage you can borrow.
It's a good idea for you to do this too. Try creating a list of your monthly income and expenses and decide a figure that you think you'd feel comfortable paying back each month.
When you apply for a mortgage, companies will do a credit check on you. This means they'll use a Credit Reference Agency such as Experian, Equifax or TransUnion to search your credit report and see how you've managed your credit accounts for the past six years.
They'll use this information (along with the information you give them in your application, such as your salary) to calculate a credit score for you - and this score will determine whether they say yes or no to your application.
Not only that, but your credit score will impact what rates you're offered and even how much mortgage you can get.
How do I find out how much mortgage I can borrow?
Now you know what companies are looking at when they decide how much to lend to you - how can you get an idea of what mortgage you'd qualify for, yourself?
Well, there are tons of free online mortgage calculators that you can use.
The Money Saving Expert has this mortgage calculator which will give you an idea of how much you can borrow, based on your income.
If you're trying to get an idea of . how much your monthly payments might be, then The Money Advice Service have this handy mortgage calculator.
Ultimately, you're best off speaking to an expert. A Mortgage Broker will be able to chat to you about your circumstances and advise you on the best options available to you.
If you'd like to book a free consultation with one of our friendly advisers then we'd love to help!
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