How Much Can I Borrow on a Mortgage?

Start with the income multiple

Almost every UK lender begins with a multiple of your assessable annual income. Around 4.5 times is the common baseline. Roughly 4 times applies where the profile is tighter, and 5 to 5.5 times is available to higher earners, certain professions such as medicine, law and accountancy, and applicants with larger deposits.

On a joint application the multiple applies to combined income. Two people earning 35,000 each are assessed on 70,000, which at 4.5 times is 315,000 before any other adjustment.

Then the affordability test

The multiple is a ceiling, not the answer. Lenders then run an affordability assessment: they take your income, deduct committed outgoings, and test whether you could still pay the mortgage if rates rose. That stress test is why the figure you are offered is often below the multiple.

The outgoings that bite hardest are credit commitments and childcare. As a rough rule, every 100 a month of car finance, loan or credit card minimum payment reduces borrowing by roughly 15,000 to 20,000.

• Car finance, personal loans and credit card balances
• Childcare and school fees
• Child maintenance and other court-ordered payments
• Student loan deductions, which are treated as a reduction in net pay by many lenders
• Existing mortgage or rent where you are keeping the property

Deposit and loan to value

Your deposit sets your loan to value, and loan to value sets both the maximum loan and the rate. At 5 per cent deposit you are in the smallest part of the market at the highest rates. At 10 per cent the choice widens considerably, at 15 per cent it widens again, and at 25 per cent or more you reach the keenest pricing.

A deposit also raises your total budget rather than your loan: borrowing 315,000 with a 60,000 deposit gives a purchase budget of 375,000, minus buying costs such as stamp duty, legal fees and survey.

Why your income type changes the answer

Two people with the same headline earnings can be offered very different amounts. A salaried applicant is assessed on contractual pay. A self-employed applicant is assessed on filed profit, a contractor may be assessed on an annualised day rate, and a variable earner may have half their bonus discounted.

This is why an online calculator is a starting point rather than an answer, and why we work from your actual documents before giving you a figure to plan around.

Getting a figure you can rely on

Our calculator gives an indicative range in a couple of minutes. For a figure you can make an offer on, you want a lender decision in principle, which involves a credit check and a specific lender's own affordability model. We can usually get that back to you the same working day.