Mortgages: how much can you afford to borrow? 

Lenders wish to know your earnings

Now, there’s a number of issues to think about with regards to how a lot you’ll be able to borrow to purchase a house.

The very first thing we often have a look at is our earnings – and that may be simply your earnings in the event you’re shopping for alone or joint earnings in the event you’re shopping for a house with another person.

You possibly can often get a mortgage that’s between 4 and four-and-a-half occasions your earnings however in actuality they are often something from three-and-a-half to 6 occasions your earnings. 

For those who’re getting a joint mortgage with one other particular person, that is based mostly in your mixed earnings.

So say you earn £40,000 a yr. You can probably borrow as much as £180,000. And in case your associate’s wage was £50,000, your whole mixed mortgage might be as a lot as £405,000. 

Nonetheless, bear in mind, the extra you borrow, the bigger your month-to-month repayments will likely be.

Strive our mortgage calculator

Our mortgage calculator helps simplify issues by providing you with an thought of how a lot you might borrow and your possible month-to-month repayments.

Earnings multiples aren’t assured

You could be supplied much less if the lender thinks you gained’t be capable to afford the repayments. This might be as a result of a lender will assess your affordability earlier than deciding how a lot to give you. This contains issues like your credit score rating, if in case you have excessive outgoings or plenty of debt. 

Or you might be turned down for a mortgage altogether in the event you don’t meet the lender’s eligibility necessities. 

Now, what we’ve seen not too long ago is a few lenders loosen up their affordability guidelines so that folks can borrow extra. 

And in July 2025, the Financial institution of England really helpful that lenders might be given extra flexibility with regards to providing a better mortgage to earnings ratio.

In the intervening time, slightly below 10% of recent mortgages provide debtors greater than 4.5 occasions their earnings. However the Financial institution of England says it’s joyful for banks and constructing societies to extend this to fifteen% – or about 36,000 new mortgages.

These guidelines aren’t in place but, however we’ll remember to replace you if issues change.

Subsequent up there could be methods to spice up what you’ll be able to afford, for instance, in the event you’re a primary time purchaser or knowledgeable, which I’ll clarify extra about later. 

Plus there’s the Lifetime ISA, which in addition to curiosity or funding returns additionally provides a 25% Authorities bonus as much as £1,000 a yr. The cash in a LISA can solely be used in the direction of your first property or retirement.

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Strive our mortgage affordability calculator

However how will you really work out what you would possibly be capable to get based mostly in your wage? The best manner is to make use of a mortgage affordability calculator.

We’ve not too long ago partnered with mortgage broker Tembo to make it simpler and extra reasonably priced for Be Intelligent With Your Money readers to get mortgages. 

And as a part of that partnership, we’ve acquired quite a few helpful instruments on the web site, together with our personal mortgage affordability calculator, that can assist you get began. 

This calculator is nice as a result of you will get an estimate for a way a lot you’ll be able to borrow in minutes, based mostly on only a few particulars. And in the event you want additional assist or recommendation, you will get in contact immediately with Tembo. This service is value as much as £499 however free whenever you go by way of Be Intelligent With Your Money and find yourself taking out a typical mortgage.

For a full demo of how the calculator works, you’ll be able to watch our video over on Youtube.

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Contemplate your outgoings

When you’ve acquired your estimate from the calculator, you’ll want to think about how a lot you’ll be able to really afford to repay every month. 

For those who use a mortgage broker, or in the event you go on to a lender, you’ll be put by means of affordability checks nevertheless it’s a good suggestion to have a take into consideration how a lot you’ll be able to comfortably pay. 

Keep in mind, the mortgage repayments will likely be on prime of all of your different payments together with power, council tax, insurance coverage, broadband, meals. For those who’re shopping for a leasehold property, you’ll additionally want to think about the service cost and administration charges. 

Plus, you might have money owed it’s good to repay and it’s a good suggestion to make sure you can nonetheless put apart cash into your financial savings.

With the lender’s affordability checks, they’ll wish to see how a lot you earn versus how a lot you spend. 

They’ll then resolve whether or not they assume you afford the mortgage repayments on the charge supplied – and if charges had been to rise. 

Let’s not neglect what occurred after the disastrous mini-budget in September 2022. 

Mortgage charges soared to a peak of 6.65% including lots of of kilos a month to many owners’ repayments. 

Lenders will see all your spend

Lenders will even wish to see what you spend your cash on – the place you’ll be able to in the reduction of, like with subscriptions or fitness center memberships, and the place you won’t be capable to, like with childcare.

After we speak about earnings, the lender will take into account your earnings from work, plus any advantages you would possibly obtain and any earnings from different sources, similar to dividends from investments or cash from a pension or property.

If we’re contemplating outgoings, your lender will take into consideration your residing bills, like payments, transport prices and what you spend on meals, debt repayments, childcare and the way a lot you spend on having fun with your self. 

That’s to not decide your life-style, as I stated earlier than it’s extra to seek out out the place you might afford to chop again if charges improve sooner or later. 

Nonetheless, some forms of spend would possibly fear the lender, like playing. So in the event you’re keen on inserting bets, it’s finest prevented within the months earlier than making use of for a mortgage. 

You’ll fill these figures in on a type, however in case you’re fascinated about tweaking these figures in your favour, don’t. You can be requested to again your self up with financial institution statements and pay slips to show your earnings and outgoings.