Before asking yourself "How much can I borrow for a mortgage?" it's important to think about how much you can afford. There are a few things you need to consider whether this is your very first mortgage or you're thinking about moving home.
An online calculator is a useful tool to give you an idea of how much you can potentially borrow. This is based upon the price of the property and the deposit that you have. Lenders usually offer a mortgage based on a multiple of your annual salary (which they’ll check against payslips and your p60) and your own personal circumstances but the only way of getting an exact figure is to fill out a mortgage application which will take account of all the information supplied by you.
There are many lenders offering many different types of mortgages but most will consider similar information when working out how much you can borrow. Some key factors they will think about are:
In order to be offered a mortgage by us you'll have preferably held the same job for at least two years, or at least been in work for two years. We may offer a multiple of your current salary. Other factors like your age just now and the age at which you expect to retire may affect how much you can borrow and how long the period of your mortgage might be.
What your mortgage might cost may seem straightforward but there could always be a few expenses that you miss. Our article on the costs of buying or moving could help you become more informed on the incidental costs which may arise and avoid any potential shocks.
You may think that you should apply for as large a mortgage as possible, however you should be careful not to overstretch your finances. Once you have your new home you'll still want to have money for fun things like holidays, or need money to fall back on should you need a new tyre for the car or a repair to your house.
While working out what mortgage you can afford it's always worth considering what would happen to your payments should interest rates go up. Even if the Bank of England rate has been stable for a while, it's always possible that it could change. Our article on what happens if interest rates go up can help you work out whether you can still afford your payments even if the rate rises.
No matter how prepared you are sometimes your situation can change for reasons outside of your control. Our guide to what to do if your circumstances change could help to explain your commitments to the mortgage and how these can be affected should you lose your job, have an accident or encounter other difficulties.
It's likely that the biggest financial commitment you'll make is to your mortgage. 'How much can I borrow?' might seem like the main question to ask but really it's more important to consider 'How much can I afford?' Preparation is key. Research and make sure you know exactly how much you can afford to spend, avoid overstretching and you'll have a stress free start to life in your new home.
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