The size of a mortgage you can borrow normally depends on three main factors:
- How much you earn
- How much the property you are buying is worth
- How much the lender thinks you can afford to repay each month
How Much you earn
The amount you can borrow will vary between lenders but a good rule of thumb is four and a half times your annual earnings. You may be able to borrow more, particulalry if you have a good credit history and a good savings record. A good history of paying rent is another way to show that you can repay a mortgage.
How much the property you are buying is worth
Most lenders will loan up to 90% or 95% of the property's value. (This is known as the loan to value ratio). Others will lend more or less than this - depending on the value of the property, the equity you will have in it and in other properties.
Some lenders will let you have up to 100% ie a 100% mortgage.
How much the lender thinks you can afford to repay each month
Most lenders will allow you repay between 35% and 40% of your take home pay on mortgage and loan repayments. And if you have a good saving record (or a history of savings and paying rent) this may be even more.
Calculator
You can check out our calculator below to give you an indication of how much you can borrow.
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