How Much Can I Borrow?

This depends on

(1) How much income you have.
(2) How much the property that you want to mortgage is valued at
(3) How much the mortgage lender thinks you can afford.

1) How much income you have
The amount you can borrow will vary between lenders but the rule of thumb is three and a half times your annual income. You may get up to four times, particularly if you have a good mortgage broker. In addition to earned income some lenders accept other types of income e.g. tax credits & disability allowances.

For a couple buying together typical variations would include:

Couple 1: two and a half times both annual incomes.

Couple 2: three to three and a half times the greater income plus one year of the second income.

Some lenders now use more sophisticated credit rating methods, where they examine your income and your outgoings. The idea is that every borrower has unique circumstances. Someone with teenage children and high outgoings can't afford to borrow as much as a singleton earning the same salary.

Sometimes people are lent five times income.

The quickest way to find out how much you can borrow is to ask an experienced mortgage adviser. Please contact us Tel: 0845 0523 558 and we would be happy to advise.

2) How much the property that you want to mortgage is valued at.

Most lenders will loan up to 75% of the property's value. (This is known as the Loan to Value ratio)

Some will lend up to 90 or 95% of the property's value.

Some will let you have a 100% Mortgage - but you'll pay over the odds for this and will probably be forced to buy mortgage indemnity insurance.

A few will even lend more than 100% but special rules will apply.

3) How much the mortgage lender thinks you can afford

You may be able to get a mortgage which stretches your budget to the limit but leaves you in trouble when you have to pay the other costs involved in buying your home and its future running costs.

Some lenders will want to estimate this by checking your average outgoings e.g. your household bills, any debts etc. Some will get you to fill in a detailed questionnaire either by hand or on the phone or online etc.

If you're a first time buyer it will always help if you can show you've been paying regular rent for a similar amount to what your intended mortgage payments will be.

To find out how we can help please complete our simple on line enquiry form today and we will contact you and provide a free no obligation quote, so what have you got to lose?

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