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A Complete Guide to Mortgage Affordability

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 20, 2022

Mortgage affordability is a key issue and will determine the size of the mortgage offered to you, but the amount you earn isn’t the only factor the lender will take into account when deciding how much you can borrow on a mortgage.

We’ve put together this guide to mortgage affordability to explain exactly how it works, how it is calculated differently for each type of mortgage and much more.

What is mortgage affordability?

Mortgage affordability is an assessment that mortgage lenders carry out to determine whether a mortgage applicant can afford the repayments on a mortgage loan they’re hoping to take out. This is worked out based on their current income and outgoings, as well as other factors such as the amount of mortgage deposit available and the strength of the applicant’s credit report.

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How much mortgage can you get approved for?

Every lender is different, but most use their own affordability models based on net disposable income, and then apply a cap based on income multiples.

Typically, the amount you can borrow is determined by multiplying annual salaries.

Most lenders will work on 3 or 4 times income, some will allow mortgages of up to 5 times income and a few will lend 6 times your income.

Below you’ll find a mortgage affordability calculator that you can use to get a rough idea of how far your income will stretch…

calculator icon

Mortgage Affordability Calculator

Our affordability calculator can tell you how much you can potentially borrow from a mortgage lender. Simply enter your total household income below and our calculator will do the rest.

Input full salaries for all applicants

You could borrow up to 

Most lenders would consider letting you borrow

This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.

Some lenders would consider letting you borrow

This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.

A minority of lenders would consider letting you borrow

This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.

Get Started with an expert broker to find out exactly how much you could borrow.

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Example calculations

Below is an example of how different multiples can affect how much mortgage you can get.

Income 3x Income 4x Income 5x Income 6x Income
£35,000 £105,000 £140,000 £175,000 £210,000
£40,000 £120,000 £160,000 £200,000 £240,000
£45,000 £135,000 £180,000 £225,000 £270,000
£50,000 £150,000 £200,000 £250,000 £300,000
£55,000 £165,000 £220,000 £275,000 £330,000
£60,000 £180,000 £240,000 £300,000 £360,000
£65,000 £195,000 £260,000 £325,000 £390,000
£70,000 £210,000 £280,000 £350,000 £420,000

The above table is for comparative purposes only. You should talk to your lender or broker for the most up-to-date information for your circumstances.

What if you’re applying with someone else?

It is usually a multiple of the combined salary of everyone who’ll be named on the mortgage. If you’re buying a property with someone else, whether that’s a partner, a family member or a friend, the lender will tally up your combined income.

If you are applying for a mortgage with someone else, lenders will take both incomes into account when calculating your affordability. This usually means you’ll be able to afford a higher mortgage as most mortgage lenders are willing to offer home loans based on 3-4 times the total salary of each applicant, some will go up to x5, and a minority will stretch to x6, under the right circumstances.

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See how our customers managed to borrow more after they were matched with a specialist broker.

Hitchin, UK
I'd found my dream home but it was slightly above my budget. I went to my bank for my mortgage and was refused instantly because I needed to borrow 5.5 x my income. I was devastated! Online Mortgage Advisor though instantly reassured me and explained that specialist lenders tend to borrow higher income multiples. I applied with a specialist lender and couldn't believe that the impossible was finally possible!
Derby, UK
I was offered an agreement in principle by a high street bank who said they’d be happy to give me a mortgage for £250,000, but just before completion they went back on this because I had to take a small pay cut during the covid pandemic. I went through a tough time and my mortgage application falling apart was the last thing I needed. Thank goodness for Online Mortgage Advisor!

Other factors that affect mortgage affordability

The majority of mortgage providers would only be willing to offer you a mortgage based on a higher income multiple (x5 or x6 your salary) if they deem the level of risk acceptable.

Most lenders assess the amount of risk based on the following factors:

Affordability for first-time buyers

Affordability for first-time buyer mortgages is calculated in exactly the same way as for standard mortgage products. Some providers will cap their lending at 3-4x your salary, others 5x and, under the right circumstances, a minority will lend up to 6x.

There are also a number of government schemes for first-time buyers that help make a mortgage more affordable, including…

Help to Buy ISAs

*UPDATE: The Help to Buy: ISA scheme is now closed to new applicants. You can read more about this in our guide

Help to Buy equity loans

The equity loan scheme is available to first-time buyers or existing homeowners who want to buy a ‘new build’ house.

The purchase price must be no more than £600,000. Using this scheme, you can borrow 20% of the purchase price interest-free for the first five years, but you need to have saved at least a 5% deposit.

Help to Buy mortgage affordability

Help to Buy involves the borrower putting in 5% deposit, then taking an interest-free equity loan from the government for 20%, and a 75% mortgage with a participating lender to cover the remainder of the amount you need. This mortgage will still be based on income multiples, as normal.

You can buy any new-build property up to £600k in value, with no fees or interest to pay on the equity loan for the first 5 years of borrowing, after which you are charged a very reasonable 1.75% in the 6th year, increasing 1% + RPI every year onwards.

As it’s an equity loan, when you sell the property you give the government back their share of any profit – so if you bought for £100k using a 20k equity loan and then sold the property for £120k a few years later, you’d need to repay 20% of the £120k = £24k.

Buy-to-let mortgage affordability

Buy-to-let mortgages (BTL) work in a similar way to residential mortgages, although the fees, rates and required deposit amounts tend to be higher. Minimum acceptable deposits tend to vary between 20-40% of the property value with most buy-to-let mortgage lenders..

In addition, most BTL loans are interest-only, meaning that borrowers repay the monthly interest rates on their principal balance only and repay the capital in full once their mortgage term ends.

Moreover, the amounts that can be borrowed are calculated according to expected rental incomes. Most lenders will stress-test incomes between 20-30% higher than monthly payments to cover all eventualities, such as periods without paying tenants.

Second home mortgage affordability

Affordability assessments work in a similar way to residential mortgages, with incomes, outgoings and credit scores all scrutinised thoroughly.

Most mortgage lenders tend to be more cautious when assessing borrowers for a second mortgage as they will need to be satisfied that customers are capable of servicing monthly repayments on both their primary and secondary homes.

Models for determining this vary from lender to lender, although many will cap the loan to value (LTV) ratio at around 75-85% so will often charge higher deposits than for conventional loans.

You may also find that the number of lenders who are prepared to lend against second properties is much lower than for other mortgages.

Guarantor mortgage affordability

Lenders are often willing to allow customers to borrow more on a guarantor mortgage than if they were applying for a standard residential mortgage.

Home loans with a 100% loan to value (LTV) are available from some lenders if a family member or friend has agreed to act as a guarantor for you, which basically means you can borrow enough to cover the full amount you need.

Moreover, some providers might be more comfortable offering a higher income multiple (x5-6 your salary) if you have a guarantor behind you, providing the guarantor passes all their affordability checks.

You can read more about guarantor mortgages and how they work

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Mortgage affordability for London properties

Although property prices are generally higher in the UK capital, the amount you can borrow for a residential property would be assessed in exactly the same way as it would for a home anywhere else in the country.

Location would only be a factor if you were purchasing a buy-to-let property, as the location of the property can have an impact on the projected rental income. With this in mind, it may be possible to borrow more for a buy-to-let property in a prime location in London than for one elsewhere in the UK.

Speak to an expert about mortgage affordability

If you want to know how much mortgage you can get or how much mortgage you can afford with UK lenders, contact us today! The specialist brokers we work with are all accredited by us, can access the whole of the market and already know the lenders who are most likely to be able to help, no matter what your circumstances.

The advisors in our network have deep working relationships with mortgage lenders across the market, and they will know exactly which ones to approach to make your income go furthest.

If you have questions and want to speak to an expert for the right advice, call 0808 189 2301 or make an enquiry. We don’t charge a fee to introduce you to an expert broker and there’s absolutely no obligation or marks on your credit rating.

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Want to know exactly how much you could borrow based on your income?

Drop us a query with your exact income and we will have an expert broker answer any questions you have about how much you could borrow.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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