How mortgage affordability is calculated

Mortgage Affordability

How much can I borrow?

The first question we’re often asked.

The way the maximum affordability for mortgages works in the modern day isn’t as simple as 4 or 5 times your annual income. Every lender has their own affordability model and although they may be able lend you upto 5 times your income, this isn’t always the case.

Each lender will carefully assess your outgoings such as loans / credit cards, but also the amount you can borrow may depend on the area you’re based. Lenders often use ONS (Office for National Statistics) to determine what your living costs are likely to be, this will include things such as food, drink, bills etc.

What can affect my borrowing?

Most commonly it’s credit commitments such as Credit Cards, Car Finance, Personal Loans. But there are other factors that can affect affordability such as children/dependents, child care, school fee’s or other outgoings you may have.

It’s important that all outgoings are disclosed when looking to secure a mortgage as it could result in the lender offering less later in the application process.

What can I do to improve your maximum borrowing?

There are a number of ways affordability can be increased.

It may be a case that we can include some other income for you such as overtime, bonus or commission. Also reducing/clearing debts can help with affordability in some cases. The less credit commitments you have, the more you’re likely to be able to borrow.

If neither of the above is possible, there are occasions where you may be able to add another party to the mortgage to help with affordability such as a family member.