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Mortgage affordability calculator

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Jan 8, 2023

Fact Checked By:
David Nicholson - Finance Editor

Mortgage affordability calculator

To get an idea of the amount you can borrow, you can use our mortgage affordability calculator. You can also get an estimate for monthly mortgage payments by using a mortgage repayments calculator.

This article will provide you with a mortgage calculator. However, the numbers it returns are only a rough estimate.

If you need bespoke calculations, you should consult a mortgage broker. We’ll show you how to do this in our guide. We can introduce you to a lender who will offer you the best mortgage deal to suit your needs. They will be sure to give you the best mortgage rates and monthly payments.

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Where can I find a mortgage calculator for mortgage affordability?

Below is our mortgage calculator which will give you an idea of monthly mortgage payments for mortgages of a certain size.

Mortgage Calculator For Affordability

The affordability mortgage calculator will tell you an estimate of how much you could borrow from a mortgage lender. Enter your household income and the mortgage calculator will calculate the amount you can borrow from a mortgage lender.

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What are the main factors lenders consider when assessing mortgage affordability?

The lender will conduct affordability checks to determine how much mortgage you can afford and the monthly payments.

Each lender will have its own criteria, which can change frequently. The mortgage provider’s criteria are used to determine if someone is eligible for a mortgage.

They might look at your:

  • Income
  • Employment
  • Age
  • Credit history
  • Property type
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What is the maximum amount you can borrow?

Lenders will consider your annual income to work out the maximum amount you can borrow as a mortgage.

Mortgage lenders typically limit loans to a multiple of your annual income, normally 4.5 or 5 times your annual salary. However, some lenders offer mortgages bigger than this.

Lenders may consider your application for a joint mortgage if you apply with someone else. This will allow the lender to assess both incomes. For example, applicants with a combined income of £50,000 could borrow £200,000 from a lender working on an income multiple of 4 times your annual salary.

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Different types of income

Lenders will consider your salary from your job when calculating your income for a mortgage.

Lenders may be less keen to lend to people they think have a less reliable income. This could include:

  • Self-employed people
  • Parents on paternity leave
  • Those who earn part of their income as commission or bonus
  • Workers on short-term contracts or zero hours contracts

Depending on your circumstances, there may be limits on the amount you are eligible to borrow on a mortgage.

To find out more, use one of our mortgage calculators or speak to one of our advisors.

Other sources of income

For some borrowers, lenders will take other sources of income into account, on top of a PAYE salary.

These might include:

  • Bonuses
  • Overtime
  • Commission
  • Allowances

Not all lenders and banks will consider every income source when assessing your ability to pay. While some lenders will consider all income sources when assessing your affordability, others may only consider 50%. Mortgage calculators are a good way to gauge what you can afford.

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What other considerations and calculations will the lender make?

Lenders’ mortgage affordability calculations are based on more than your income.

They will also take into account…

Your outgoings

Providers will often factor in significant outgoings to ensure you are able to meet your mortgage payments.

The following expenses would be considered by most lenders when calculating their loan amounts:

  • Credit card debt
  • Outstanding loans
  • Dependent children and family members
  • School fees
  • Travel expenses
  • Household bills

Acceptable ratios between income and debt can vary from lender to lender. This is why it’s important that you seek specialist advice if your outgoings are significant. We can search the whole market to help you find the lender that is most likely to offer you a mortgage

Credit history

Some lenders won’t be willing to lend to someone who has had financial difficulties in the past. Even if mortgage calculators say you can afford the monthly payments, it will be harder to find a mortgage if you have a poor credit history.

What mortgage amount can you get approved with poor credit?

Lenders who accept bad credit applicants might also lend a lower amount and require a lower loan-to-value (LTV) ratio .

However, lenders have different criteria and their approach to past credit problems will vary.

There are specialist lenders that can provide mortgages for those with poor credit.

This section contains more information about bad credit mortgages.

How much deposit do you need for a mortgage?

You will need to save a deposit to buy a home. The bigger your deposit as a percentage of the property’s value, the more mortgage products you’ll have access too. A larger deposit also means you’ll be eligible for cheaper interest rates.

You might need a bigger deposit if you have a poor credit history or you are applying for a buy-to-let mortgage.

In any circumstances, you’ll need at least a 5% deposit to buy a home.

Contact us today to discuss mortgage deposits, mortgage payments, mortgage rates and any other mortgage advice you require.

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How does a Buy-to-Let mortgage calculate mortgage affordability?

Mortgages on BTL properties still require affordability checks. However, instead of basing your affordability on your personal income and using an annual salary mortgage calculator to calculate your monthly income, lenders will consider the property’s potential rental income. Lenders will usually require the rental income to be at least 125% to 145% of the monthly mortgage payment.

Lenders will also look at whether you could afford to pay the mortgage if your tenants stopped paying the rent or your property was empty.

Ask an expert advisor for information about UK mortgage affordability criteria

Once you have got an idea of the monthly payments by using one of our mortgage calculators, you can call today to discuss any topic or submit an enquiry online.

We can find a broker who is best suited for your situation to get you the best mortgage deals. There is no charge and no obligation.

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