How Much Can I Borrow on a Mortgage?

The problem is there isn't a secret formula all of the banks use to work out how much you can borrow on a mortgage.

They look at what you're earning each year, whether you've got any additional income, they look at your credit commitments and expenditure and then they make a decision.

There is no one-size-fits-all calculation to be done, each bank has a slightly different approach to mortgage affordability and some are more generous than others.

That being said, there are some general rules we can apply to give you a rough idea of what you might be able to get.

Generally speaking, a lender is usually willing to offer you around 4-5 times your annual income, so taking the combined annual income of all applicants and multiplying it by 4.5 will give you a pretty good idea of what you can have.

We made this handy little calculator to show you what that means for you, check it out here.

Now, as I said, this isn't an exact science. Lender's look at the bigger picture to work out what you can reasonably afford to pay back each month, things like credit cards, personal loans and car finance can all have an impact on your borrowing capacity.

If your monthly payments for these things are less than around £200, the impact they'll have will be minimal, so it's not the end of the world if your shiny new car is on a lease deal.

Tips to maximise your borrowing

Everybody wants a bit more. In this case, a bit more gets you a nicer first home, so let's take a look at what you can do to maximise the amount you can borrow on a mortgage.

Reduce your debts:

If you've got monthly commitments that you can afford to get rid of, do it. Reducing your monthly expenditure will have a positive impact on the amount you can borrow on a mortgage.

Work more:

If you get paid extra for working regular overtime, a lender will take this into account when deciding how much to lend you. So it really does pay to work a little more where you can.

Buy together:

Having more than one person on the mortgage can have a big impact on your borrowing amount, the lender will take the total annual income of all applicants and apply their affordability calculation to that, so buying with a partner or even your friends will make things much easier in terms of affordability.