How much can I borrow?
Next Step:
Calculate how much your monthly mortgage or interest payments would be based on the amount of money you may be able to borrow.
How much will I pay monthly?
How much mortgage can I afford?
Understanding how much you can borrow is one of the most important first steps when preparing to buy a home in the UK. Your borrowing potential depends on a variety of factors, including your income, monthly outgoings, existing debt, and credit history.
Mortgage affordability calculators—like the one above—can offer a quick estimate based on your financial circumstances. While this won’t give you a precise figure, it serves as a valuable starting point before speaking with a lender or broker. Keep in mind that different lenders have different affordability criteria, so results may vary depending on who you apply with.
What should I do before applying for a mortgage?
The first step on the road to applying for a mortgage is to speak to a bank or a mortgage broker. However, using something like a mortgage calculator to get an idea of what you can afford, is likely to help you when discussing your circumstances with the bank or a mortgage broker. It is also worth checking your credit score to see whether there is anything on your credit report which may adversely affect your application.
Here are the key steps to take:
1. Review your finances
Start by assessing your overall financial position. Take a close look at your income, regular monthly outgoings, any existing debts, and the savings you’ve built up for a deposit. This will give you a clearer picture of your borrowing power and may highlight areas where you need to reduce spending or pay off existing commitments. Lenders will closely scrutinise your financial habits, so understanding them yourself beforehand puts you in a stronger position.
2. Use a mortgage calculator
Using our mortgage calculator above can provide a quick estimate of how much you may be able to borrow based on your income, expenses, and other financial factors. This estimate can help you refine your property search to homes within your price range and avoid the disappointment of setting your sights on properties that are financially out of reach.
3. Check your credit score
Before submitting an application, check your credit file with UK credit reference agencies such as Experian, Equifax, or TransUnion. Make sure all the information is accurate and up to date, and flag any discrepancies that could impact your credit score. Lenders use this data to assess your creditworthiness, and a poor score may result in fewer options or higher interest rates. If your score needs improvement, consider delaying your application while you take steps to boost it.
4. Reduce outstanding debt
If you have existing debts, such as credit cards, overdrafts, or personal loans, aim to reduce or clear them where possible. A lower debt-to-income ratio can significantly improve your affordability in the eyes of lenders. Reducing your monthly debt obligations may also increase the amount you’re able to borrow and improve your chances of passing the lender’s stress tests.
5. Speak with a mortgage broker
Finally, it’s highly recommended to consult a mortgage broker, especially if your financial situation is complex or if you’re unsure which lender to approach. A broker can assess your circumstances, explain your options across a wide range of mortgage products, and recommend lenders most likely to approve your application. Brokers also often have access to exclusive deals that aren’t available directly to the public, which could save you money over the term of the loan.
How do you calculate how much I can borrow?
Lenders in the UK assess how much you can borrow based on a combination of income multiples and affordability criteria. This ensures that the mortgage repayments remain manageable for you, even if interest rates rise.
The calculation typically considers:
- Gross annual income
Most lenders will offer between 4 to 4.5 times your gross salary, though some may go higher in specific circumstances (e.g. high-income professionals or joint applicants). - Household expenses
Monthly outgoings such as utility bills, childcare, subscriptions, and commuting costs are factored into affordability assessments. - Debt obligations
Existing credit commitments like personal loans, car finance, or credit card balances will reduce the amount you can borrow. - Credit history
A strong credit profile can improve your borrowing potential, while a poor one may restrict it. - Stress testing
Lenders may apply a hypothetical interest rate increase to ensure you could still afford repayments if rates rise in the future.
Using a mortgage calculator that reflects these variables gives you a more accurate estimate of your potential borrowing range. It’s a useful tool for planning your budget before entering the property market.
What if I have a poor credit score?
You can still get a mortgage with a poor credit score, but it may be more difficult and could limit your options. Mainstream lenders tend to prefer applicants with strong credit histories, so if yours is less than perfect, you may need to look at specialist lenders who deal with adverse credit. These lenders may charge higher interest rates or require a larger deposit.
To improve your chances, work on boosting your credit score by paying bills on time, reducing existing debts, registering on the electoral roll, and avoiding new credit applications before applying. Checking your credit report for errors can also help. Speaking to a mortgage broker who understands the adverse credit market can increase your chances of finding a suitable deal.
Is there help available?
Programmes like the Right to Buy scheme allow council home tenants to purchase their home from the government. Meanwhile, other initiatives like the Help to Buy mortgage scheme give you a step up with essentially an equity loan from the UK government, while the Shared Ownership scheme lets you buy between 25-75% of your home’s value and pay rent on the remainder, buying bigger shares when you can afford to.