Mortgage Calculator

You can usually borrow around 4 to 5 times your salary.

Some lenders offer up to 6 times your salary, but they will be very strict about who they lend this amount to. Lenders also have different rules and the income multiple they allow can depend on many things.

They include:

• salary and source of income

• using a government homeownership scheme

• extra benefits (for example, Barclays offer Premier customers slightly higher income multiples)

• deposit size

• financial commitments and bills

• age

• length of mortgage

• leasehold costs

Mortgage calculators are an excellent way of finding out how much you might be able to borrow. However, calculators can only make an estimate: they do not take everything into account. As such, it's crucial you understand what factors the online mortgage calculator you are using considers.

Each mortgage calculator is different, but basic online mortgage calculators will usually look at:

• how many people are paying the mortgage

• salaries

• secondary income

• mortgage type

• mortgage length

• interest rate

Most mortgage calculators do not look at:

• monthly expenses

• credit score

• costs of getting a mortgage

• interest rate changes

• life changes such as losing your job

Unlike calculators, most lenders look at every issue that could affect your repayments. You might also need to pass a lender’s ‘stress test’ before they’ll give you a mortgage. This is to make sure you’ll be able to pay your mortgage if something happens that affects your repayments.

This could include:

• losing your job

• having a baby

• being ill

• a change in interest rates

To pass the stress test, lenders will look at your salary and other types of income such as pensions and investments. Lenders also look at your credit history to see what type of borrower you are. This is called a credit check. It could be a hard or soft credit check, depending on their rules.

When a lender offers you a mortgage, they’ve decided how much they’ll lend you based on:

• your salary

• secondary sources of income, such as investments

• how much you can afford to pay

To decide how much you can afford to pay, a lender must consider a range of risk-based factors, such as a rise in interest rates or potential loss of employment.

Even if a lender thinks you can afford the full amount they’re offering, you should decide how much is right for you.

Some people do borrow as much as they can in order to get their dream property. Others, on the other hand, may prefer to borrow less and take on less risk. This is ultimately down to personal preferences and attitudes to risk.

Think about what’s best for you. Remember, you might lose your home if you do not keep paying your mortgage.

According to our data, most people who get a mortgage to buy a property borrow between 2 and 4 times their income.

Generally, the average loan-to-income (LTI) ratio is higher in the south of the country where houses are more expensive.

Even if you’ve got a poor credit score now the amount you can borrow still depends on your personal situation.

A lender looks at your credit history to see how well you’ve managed debt before. This is known as a credit check.

If you have bad credit history some lenders may:

• turn you down for a mortgage

• ask for a bigger deposit

• offer you a higher interest rate

Whether your credit history will affect your mortgage application depends on:

• what the credit problem is

• the amount

• when it happened

Missing a mortgage payment or going bankrupt are two scenarios that can stay on your credit report for six years. Missing payment on a loan is clearly more serious than missing a utility bill payment, for example, and as such can harm your credit score more severely.

It’s possible to explain to a lender how you got into debt, however.

For example, if your finances are normally well-managed, but your debt is a result of a life event such as divorce, a lender might not view your debt as seriously.

You should always speak to a mortgage broker to find out how your situation could affect how much mortgage you can borrow.

It is possible to get a mortgage with no deposit.

However, most lenders require a deposit of at least 5% of the purchase price.

100% mortgages are usually linked to a relative’s or friend’s savings account.

Lenders who offer 100% mortgages include:

• Barclays

• Lloyds

• Tipton & Coseley Building Society

• Skipton Building Society

With Lloyd’s Lend a Hand Mortgage, instead of putting down a deposit, a family member puts 10% of the purchase price into a 3-year fixed-term savings account.

At the end of the 3 years, your family member will get their savings back with interest if you made all your payments.

The home is still yours. Your family member has no legal rights to it.