How much could you afford to borrow? Everything you need to know about mortgage affordability

How much could you afford to borrow? Everything you need to know about mortgage affordability

How much could I borrow? Could I borrow 4 or 5 times my salary? And what mortgage could I get with a 40k income?

These are just some of the FAQs Mortgage Confidence’s mortgage adviser Jo Jingree gets asked when prospective homeowners are trying to figure out how much they can afford to borrow. “But there is no one-size-fits-all,” Jo says. Each lender has their unique affordability calculations. So, unlike a board game, there are no hard and fast rules to these questions.”

What determines how much money you can borrow?

In a nutshell: quite a few factors influence how much you can borrow. Of course how much you earn is a major part of the affordability criteria, but so is the total of all your outgoings, including: 


1. Debts

Have any credit cards that you don’t pay off in full each month? Lenders want to know if and how much debt you currently have so they can work out how much you can afford to repay each month on your mortgage. 


2. Personal loans

Have you got a car loan? Maybe you took out £5,000 to help pay for a wedding? Or perhaps you’ve bought a car through hire purchase? These outgoings will all be taken into consideration. 


3. Student loans

Are you still paying back your student loan? While lenders won’t necessarily need to know how much you owe on your student loan, they will take into consideration how much you pay back each month or year. 


4. Pension deductions

Some lenders deduct pension contributions from your income as they see this as a monthly ‘outgoing’.


5. How your income is made up

Along with how much you earn, lenders will also want to see how your income is made up. For example, some people are employed by a company, others are self-employed and some have multiple streams of income, for example through universal credit or dividend. 


6. How many people on the mortgage

You’re probably already aware that you can get a mortgage with two people. But did you know that some lenders will allow up to four people to buy together? The more you earn and the less outgoings you have the more you might be able to afford. However, it’s important to note that some lenders will consider the income of all four earners, while others may only take into consideration the two highest salaries. 


7. Your credit score

Also known as your credit rating, this reflects how reliable you are when it comes to repaying money by looking at information from your credit report to understand your financial behaviour. This happens anytime you apply for a loan – and the same for a mortgage. 


8. Term of mortgage

This refers to the length of your mortgage. According to one source, the average period for repayment of a mortgage is 25 years. But all lenders will now put your mortgage over a longer term — up to 40 years in some cases. Of course, this varies on a case-by-case basis and is dependent on a number of factors. But if yours is a full repayment mortgage, the longer term you take, the lower your monthly repayments will be — and this could also allow you to borrow more as a result. However, it’s important to note that the longer the term, the more interest you could pay back. 


9. Interest rates

Wondering when interest rates will drop? Aren’t we all! Interest rates are another factor that can affect how much you can afford to borrow. But how so? According to the Bank of England, as interest rates have increased, lenders are now assessing whether prospective borrowers can afford to repay their mortgages at higher interest rates. This is sometimes referred to as a ‘stress test’. Put simply: the higher the interest rate, the more you will be expected to pay back each month. 


Better to be safe than sorry

“This seemingly never-ending list of factors might sound intrusive,” Jo says. “But lenders have to do their due diligence to make sure you can afford to pay back your monthly repayments. Which not only protects them, it protects you!”.


Remind me, how does the mortgage process work?

The mortgage process can seem a little daunting if you haven’t done it before. But in brief, a mortgage is a type of loan designed to help you buy a home. 

When you apply for a mortgage unless you’re taking out a 100% mortgage, you’ll need to put down a percentage of the cost of the property value. To make up the rest, you’ll need a mortgage. You borrow this money from a bank or lender, then pay this money back with interest each and every month for a set term. 

How much you’ll pay in interest depends on your mortgage interest rate, how much you borrow and for how long. The quicker you pay off your mortgage, the less interest you’ll pay.


Ready to find out how much you can borrow?

We know mortgages might seem confusing. But at Mortgage Confidence, we offer a no obligation 30-minute consultation to help deal with these sorts of enquiries and to make sense of it all.

To find out how much you can borrow, do get in touch with award-winning mortgage adviser Jo, who has been in the industry for more than 20 years’, to get the ball rolling.


There may be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £399. Your home may be repossessed if you do not keep up repayments on your mortgage.

Please be aware that by clicking on to some of the above links you are leaving the Mortgage Confidence Ltd website. Please note that Mortgage Confidence Ltd nor HL Partnership Limited are responsible for the accuracy of the information contained within the linked site(s) accessible from this page.