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Mortgage affordability calculator

Author: Myles Robinson - Expert Finance Advisor

Posted: Jul 6, 2022

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 us as 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 ensure to give you the best mortgage rates and monthly payments.

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We have access to over 200 lenders in the UK to get you the best rates

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Where can I find a mortgage calculator for mortgage affordability?

Below is our bespoke mortgage calculator which will give you your monthly payment and how much you could borrow.

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 calculators 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

Lenders have their own criteria, which can change frequently. The mortgage providers criteria are used to determine if someone is eligible for a mortgage.

They might look at you:

  • 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 and use a salary calculator to calculate the amount of how much you could borrow to finance a mortgage and the monthly payments.

Mortgage lenders typically limit loans to a multiple your annual income. Mortgage lenders will limit mortgages based on your salary. So, if you are looking to get a mortgage, a lender will typically limit mortgages to 4.5x your annual income.

Some lenders will offer you up to 5x your annual income. Others may even give you 6x. These are classified as large mortgages.

Lenders may consider your application for a share mortgage if you apply with a partner. This will allow lenders to assess both incomes. For example, applicants with a combined income of £50,000 could borrow £200,000 from a lender using four x your income.

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Different types of income

Lenders will consider your income when calculating your income for a mortgage. They also consider any financial obligations that might prevent you from paying your mortgage payment.

Lenders may also be less favourable to applicants with a less reliable income. You could apply if:

  • Mortgages are available to self-employed people.
  • Maternity leave
  • Variable income (such as bonuses).
  • Are you employed on a contracting or short-term basis?

You may not be able to borrow the maximum amount you are eligible for on a mortgage. There may also be fewer lenders willing to lend you a contractor loan. This doesn’t necessarily mean you can’t get a mortgage with the above.

To find out more, send an enquiry here use one of our mortgage calculators and speak to one of our advisors will get back to you.

Other sources of income

Lenders may be interested in other income sources, such as what you make and how reliable it is.

This allows them to get a true reflection of your total income, which could include:

  • Bonuses.
  • Overtime.
  • Commission – Learn how to calculate the commission income for a mortgage with our guide
  • Allowances.
  • Additional income

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%. Some won’t even consider them at all. Mortgage calculators are a good way to gauge what you can afford.

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What other considerations & 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 pay your mortgage payments.

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

  • Credit card debt
  • Outstanding loans
  • Children and family members who are dependent
  • School fees
  • Travel expenses
  • Bills: Council Tax, mobile phone etc

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 help you find the lender that is most likely to give you favourable results using our whole-of-market brokerages.

Credit history

Mortgage affordability checks are identical to those for applicants with good credit and those with poor credit. However, lenders may not 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, if you have a bad credit history it will be harder for you.

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 loan-to-value (LTV) ratio between 75% and 90-95% for those with less severe or more recent credit problems.

However, lenders have different criteria and will lend to bad credit mortgages. They also accept different types of credit.

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

This section contains more information about bad credit mortgages.

Calculation of deposit requirements

You will need to determine how much deposit you are required to make in order to figure out your budget, how much you could borrow and mortgage repayments.

The amount of your deposit will vary depending on your financial situation, your ability to pay, the type of property you own, and your credit score.

Solid credit history can help you qualify for a deposit of 5%. However, these are more difficult to get and will only be approved under the right circumstances.

Lenders will require a minimum 5-10% deposit, which would allow you to have a maximum Loan-to-Value (LTV) between 90 and 95%.

If your situation is deemed to be riskier, you might need to deposit a greater percentage.

Contact 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 your potential rental incomes. Most lenders will accept anywhere from 125-170% depending on your tax situation.

Providers will also ask about the number of tenants you have and whether you have the ability to pay your mortgage if your tenants are not available.

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.

Relax, contact us and let us find the broker who is best suited for your situation to get you the best mortgage deals. There is no charge and absolutely no obligation to improve your credit rating.

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