How much mortgage can I afford?
Mortgage lenders use your income details to establish a basis for the maximum amount you can borrow. If you are applying with your partner, both incomes are considered.
All lenders are different and have their own criteria for what you will be allowed to borrow. Looking at your income alone, mortgage lenders will typically offer 4 to 5 times your combined salaries.
Bonuses, overtime & commission
It may be possible, subject to the lender, to include this income as part of your mortgage application, especially if it is a regular or guaranteed.
Documentary evidence may be required to prove that you receive this income in addition to your basic salary.
Getting a mortgage if you are self employed
If you are self employed, the earnings from your business will be used to work out how much you can borrow. You’ll need to be able to provide a good track record of trading for 3 years or more to qualify with most lenders.
For sole traders and partnerships, mortgage lenders typically look at the net profit drawn down from the business to assess how much you can borrow.
For company directors, both salary and dividends are considered so it doesn’t matter if you pay yourself a low salary and received the rest of your income via dividends.
Outgoings and deposit
Don’t forget that it’s not just about how much you earn, it’s about how much you can afford. Lenders will always review your outgoings to see your current and future disposable income.
The size of your deposit will also be taken into consideration. If you have a low deposit you may struggle to get a mortgage with some lenders. For a Buy To Let mortgage, the required deposit is typically higher.
Speak to an affordability adviser
While there are thousands of mortgage calculators available online, they don’t often take into account appropriate details.
The quickest and simplest way to find out what you could borrow based on your circumstances, is to get in touch for a no obligation discussion.
We work with the biggest lenders in the UK and have access to a wide range of deals that we can match with your specific circumstances. When you are ready, simply get in touch and we’ll be happy to help.