Table of Contents
1. Introduction
2. How Much Mortgage Can I Afford?
3. What Mortgage Can I Afford?
5. Using the EHF Mortgages Calculator
6. Why You Should Speak to a Professional Broker
Introduction
One of the most common questions for anyone looking to buy a property is, “How much mortgage could I borrow?” The answer depends on a variety of factors, including your income, credit history, and the property you’re interested in. While online tools like the EHF Mortgages Calculator can provide an initial estimate, the best way to get a full picture is by consulting a professional broker. Every borrower’s situation is unique, and working with an expert ensures you’ll explore all available options tailored to your needs.
This guide will walk you through the key considerations when determining how much mortgage you can borrow and why personalised advice from a broker is invaluable.
How Much Mortgage Can I Afford?
The amount you can afford to borrow depends on two key factors: your income and your outgoings. Mortgage lenders typically calculate your borrowing potential based on a multiple of your annual income, but they also assess your financial commitments to ensure you can comfortably manage repayments.
Income Multiples
Lenders often use income multiples to determine your borrowing limit. For example:
• Single applicants: You may be able to borrow up to 4.5 times your annual salary.
• Joint applicants: Lenders may consider the combined income of both applicants, applying similar multiples.
• Enhanced Schemes: If you’re a First Time Buyer, or in one of the professional careers, a number of lenders will allow you to borrow more.
For example, if you earn £50,000 per year, you might be eligible to borrow up to £300,000 if you are a First Time Buyer. However, this is just a guideline—actual amounts can vary depending on your circumstances.
Factoring in Expenses
Lenders will also look at your monthly expenses, including:
• Credit card payments
• Loan repayments
• Utility bills
• Travel costs
• Childcare expenses
• Student Loans & Pension Contributions
These outgoings affect your affordability, which plays a crucial role in how much you can borrow.
What Mortgage Can I Afford?
Once you know how much you can borrow, the next step is determining whether the repayments are affordable. Lenders assess this through a process called stress testing, which evaluates whether you can still afford repayments if interest rates rise.
How Lenders Calculate Affordability
Affordability assessments include:
1. Your monthly income and expenditure.
2. The size of your deposit (typically at least 5% of the property value).
3. Your credit history—missed payments or defaults may impact your borrowing potential.
4. The property type—some properties, such as flats in high-rise buildings, may require specialist mortgages.
Using Online Tools
The EHF Mortgages Calculator is an excellent starting point to estimate your borrowing potential. By inputting details like your income and outgoings, you can get a rough idea of how much mortgage you could afford. However, these tools can’t account for every nuance of your financial situation, making it essential to consult a broker for tailored advice.
What Mortgage Can I Get?
The type of mortgage you qualify for depends on various factors, including your credit score, employment status, and the lender’s criteria. Here are some common scenarios:
First-Time Buyers
If you’re a first-time buyer you may qualify for a larger mortgage, or the shared ownership scheme. These schemes can reduce the deposit required, making homeownership more accessible.
Buy-to-Let Mortgages
For those looking to invest in property, a buy-to-let mortgage offers options tailored to landlords. Lenders will typically assess the expected rental income rather than your personal income.
Bad Credit Mortgages
If you’ve faced financial challenges in the past, you may still qualify for a mortgage through specialist lenders. These lenders focus on your current financial situation and repayment ability, offering tailored solutions for those with CCJs, missed or late payments, defaults, or IVAs.
Self-Employed Borrowers
Self-employed individuals often face additional scrutiny, as lenders require proof of consistent income. Typically, you’ll need to provide at least two years of accounts or tax returns to demonstrate your earnings, however we do have mortgage lenders that will work on just one year of accounts.
Using the EHF Mortgages Calculator
The EHF Mortgages Calculator is a quick and easy way to estimate how much you could borrow. By entering your income, outgoings, and deposit amount, you’ll receive an initial calculation of your borrowing potential. However, it’s important to note that these tools provide only a general guide.
For a more accurate assessment, speaking to a professional mortgage broker is crucial. Brokers can help identify:
• Special offers or schemes you may qualify for.
• Lenders who cater to your specific financial situation.
• Hidden costs or fees associated with certain mortgages.
Why You Should Speak to a Professional Broker
While online calculators are a helpful starting point, they can’t replace the personalised advice of a professional broker. At EHF Mortgages, our brokers specialise in assessing your unique circumstances, ensuring you have access to the best deals on the market.
The Benefits of Working with EHF Mortgages
1. Tailored Advice: We consider your full financial picture, including any complexities like self-employment or bad credit.
2. Independent Access: Unlike high street lenders, we have access to products from a wide range of lenders, including those who specialise in unique situations.
3. Time-Saving: We handle the legwork, from comparing rates to managing the application process, saving you time and effort.
4. Peace of Mind: With our expertise, you’ll have confidence in your borrowing decisions, knowing that you’ve explored every option.
Conclusion and Next Steps
Determining how much mortgage you could borrow is a complex process influenced by various factors, from your income and outgoings to your credit history and property type. While tools like the EHF Mortgages Calculator are a great starting point, speaking to a professional broker is essential to fully understand your options.
At EHF Mortgages, we’re committed to helping you navigate the mortgage market with confidence. Whether you’re a first-time buyer, a landlord, or looking to remortgage, our team is here to provide expert advice tailored to your needs.
Ready to explore your mortgage options? Contact EHF Mortgages today to book a consultation and take the first step towards securing your dream property.
