Mortgage affordability calculator

Discover how much you could borrow – and the method we use to determine that amount – with our simple to use Affordability Calculator.

Knowing what you can afford to borrow is the first step in deciding which mortgage type and, ultimately, which deal is most suitable for your circumstances. So we recommend you do this as early as possible in your mortgage application process.

There a number of benefits to using an affordability calculator:

  • Learn exactly how much you can afford to pay each month
  • Get a clear oversight of your monthly income and outgoings
  • Plan for the future and budget accordingly
  • Choose a mortgage lender and deal that suits your needs

How much can I borrow for my mortgage?

Before 2014, mortgage lenders would typically determine your affordability by looking at your income. In most cases, you’d have been able to borrow between three and five times your annual income.

For example, if your annual income was £45,000, you might have been able to borrow five times that amount – giving you a potential mortgage of up to £225,000.

But in 2014, the now Financial Conduct Authority or FCA (previously known as the Financial Services Authority) published the Mortgage Market Review, which introduced a number of changes to how affordability was determined. The most notable change was that mortgage lenders could no longer solely use income.

The process of determining affordability now covers the following elements:

1) Your income
Not only does this cover your basic salary, it must also include any income you receive from investments, pensions, or financial support. You’ll need to provide evidence of your income in the form of payslips or accounts, all supported by bank statements.

2) Your outgoings
Your mortgage payments tend to be the largest monthly outgoing, but a lender must also be aware of other outgoings you’re committed to.

This could include credit card repayments, any insurance direct debits, your monthly bills, and other loans you may have. You might also be asked for estimates relating to your monthly living costs, but this is at the discretion of the lender.

3) A ‘stress test’
This relates to future changes that may impact your ability to afford your monthly mortgage payments. Scenarios the lender might consider are:

  • If you or your partner lost their job
  • If you decided to have children or more children
  • If you or your partner could not work due to illness
  • If interest rates increased or decreased

They do this by taking into account your current lifestyle, along with your income and outgoings, and calculating the possible financial impact of any of these changes.

What if you’re self-employed?

If you’re self-employed, you can often still get a mortgage, though most mortgage lenders will be more cautious than if they were lending to someone working as a full-time employee.

A deposit of at least 5% of the value of the property, a strong credit history, and a track record of a minimum one year (preferably two) of regular work, should help ease any concerns of a mortgage lender.

Find out more about getting a mortgage when you’re self-employed.

Using our Mortgage Affordability Calculator

For a better understanding of what you could afford, try using our straightforward Mortgage Affordability Calculator. You’ll need to answer the following questions:

1) Have you just started looking or are you currently enquiring into properties?
Let us know what best describes your current situation.

2) What’s the combined income (before tax) of all the mortgage applicants?
This should include all income – including anything on top of your basic salary.

3) How much can you put towards a deposit?
For first time buyers, we recommend between 5% and 20% of the value of the home you’re looking to buy.

Based on your answers, our Mortgage Affordability Calculator will immediately provide you a mortgage figure. You can then continue to receive your Mortgage in Principle - which you can use to demonstrate to estate agents that you’re a serious buyer - or you can immediately continue to explore your mortgage options.