Mortgage Calculator - What Can You Borrow?
Our Mortgage Calculator is a fast tool to help you understand how much you can borrow in the UK.
Our calculator can help:
As specialist mortgage providers, take a look at our guide to understanding how affordability assessments work, and how much you can borrow as a UK applicant.
What mortgage can I apply for?
In the UK, mortgage lenders usually work on a standard calculation of up to five times your annual income. This calculation takes into consideration both salaries if you are applying for a joint mortgage.
The Revolution Brokers Mortgage Calculator will help you understand what sort of mortgage offer you might expect to receive.
Affordability checks have become crucial to lenders in being able to make an offer since the crash in 2008, so it is essential to understand how lenders calculate affordability, and what impact your credit rating has.
Another factor is the interest rates, since lenders need to assess whether you would be able to continue to afford your mortgage if interest rates exceeded the Bank of England base rate of 4%. This process is called stress testing.
Some lenders are only willing to consider applications at the upper levels of affordability if you already bank with them, or can offer a significant deposit towards your property purchase.
In this scenario, Agreements in Principle (AIP) are an excellent stepping-stone to help you understand what you could borrow. Estate agents recognise the importance of an AIP, and you can obtain one quickly using an experienced broker such as Revolution Brokers.
There is sometimes a difference between what a lender will offer you, and what you can manageably afford. Revolution Brokers are here to help balance that scale and make sure you get the best deal for the foreseeable future.
Lenders might be able to extend a maximum amount of borrowing, but it is worth taking your time to decide whether you can feasibly keep up with the repayments that go hand in hand with a big mortgage.
Generally, we advise that allocating any more than 30% of your net salary to your mortgage can be problematic. The issue can be that paying so much of your income towards your mortgage means that you cannot look after other vital areas of your wellbeing and lifestyle.
Particularly in central London, it can be a big challenge to keep these costs under the 30% benchmark.
If you are struggling to balance your income against your dream home, give our friendly team a call. We can help secure the best deals, negotiate terms to fit in with your income streams, and support you in understanding which mortgage solutions will be viable for you over the long run.
Can I get a mortgage if I have a bad credit rating?
Credit history can be somewhat arbitrary, and we deal with many clients who are frustrated at past circumstances having an ongoing impact on their ability to secure affordable financing.
Revolution Brokers specialise in helping home buyers and investors secure lending who are unable to do so through mainstream providers.
If you have a large deposit to hand you might be able to achieve a mortgage offer, but for the best chance in making that leap, drop us a line and we will find the most suitable options for you.
How can I get a mortgage without a deposit?
A mortgage offered with no deposit is called 100% Loan to Value (LTV) - this means that the mortgage value is 100% of the value of the property. Some lenders can offer 100% LTV mortgages, but this is a specialist product and less available in the mainstream market than mortgage offers against a typical deposit of 5-15%.
That doesn't mean to say you shouldn't - and can't - take your chance to get a foot onto the property ladder! With low house prices, the higher interest rates payable for 100% LTV mortgages may still pay dividends in the long-term.
If you don't have a deposit but have found the home, or the investment, of your dreams, give us a call on 0330 030 3040 and we will find packages to make your aspirations a reality.
How do mortgage affordability checks work?
Generally, initial mortgage assessments include a 'soft search' - which means that credit file checks will have no impact on your credit rating since other lenders cannot see them.
If you decide to go ahead with a formal application, then this assessment will be recorded. Many homebuyers prefer not to do so, since having multiple credit checks can look bad on your credit file and create problems in the future. Likewise, a rejected application can be detrimental to your overall credit score.
The affordability checks depend on the lending, and typically use established credit rating providers such as Experian, TransUnion or Equifax. If you are not using a broker such as Revolution Finance, take care in getting a clear idea of what the application process involves before you give permission.
Generally, affordability looks at what you earn, how stable your employment is, how long you have lived at your existing property, and how long a record you have with your current account provider.
Balancing income against outgoings
When a mortgage provider considers a new application, they look at various factors:
- How much your salary is
- Any other incomes such as bonuses and investments
- Additional revenue from pensions and savings
You will need to provide a paper trail to back up this declared income, for example with bank statements and payslips. Self-employed applicants need to be able to demonstrate their average salary.
Expenses are another essential factor in establishing affordability. These costs include things like your rent or existing mortgage, regular bills, living expenses and any current debt repayments.
Demonstrating responsible money management is, therefore, essential in securing an attractive mortgage offer.
What is stress testing in mortgage applications?
With the variability of interest rates in play, lenders need to assess whether you would still be able to afford your mortgage if interest rates increased to a level of 3% over their standard variable rate (SVR).
A typical SVR is around 5.11%, and so the stress test interest rate is currently at about 8%. If you could continue to afford repayments at this interest rate, your lender has the assurance that your application has been successfully stress tested.
Alternatively, having savings equivalent to around three months of mortgage repayments shores up your application and proves affordability.
Can I borrow the maximum mortgage amount?
Being offered a large amount of lending can be exciting and tempting, but it is worth being pragmatic and thinking about how much of a difference this will make if interest rates rise.
Our recommendation is to borrow the smallest value that you need to. Applying for less gives your mortgage a lower LTV ratio, and produces savings in interest rates. For example, if you have saved a significant deposit, you could choose to purchase a smaller property against which your savings provide a solid foundation, rather than investing in a much bigger purchase with the minimum percentage deposit.
It is also worth comparing the rates against each stage of LTV. You will usually pay higher interest the higher your LTV ratio, so often accepting the most considerable amount of finance will cost you much more than necessary in the long-run.
How can I borrow at a lower LTV when remortgaging?
The lower the LTV you borrow at, the lower the interest rates you can expect to pay. There are two ways to do this - either by increasing your deposit or recognising the equity in your home.
For example, if you are looking to remortgage since your existing five-year deal has come to an end, you will have already made five years worth of repayments. Your property is likely to have increased in value during this time, so you can:
- Have your property revalued to get an accurate, up to date valuation
- Borrow the minimum mortgage amount to repay your existing mortgage
- Use a broker to find the lowest interest rates available at your required LTV
You can undoubtedly get a mortgage if you are self-employed. Still, the tricky part is the affordability assessment, since you will need to demonstrate an accurate estimate of your future income.
Some lenders avoid self-employed mortgages because of this complication. Revolution Brokers work with several specialist lenders who are experienced in the field of self-employment and can adapt their income calculations.
Usually, self-employed applicants will need at least two years worth of tax returns or accounts to show how much they earn on average. Requirements vary between lenders, so working with a broker means we can help with these negotiations and verifications on your behalf.
Give our team a call on 0330 304 3040 or drop us a message at email@example.com - we can help you understand how mortgage calculators work, which lenders will support your application, and find you the ideal options to move forward with your purchase or remortgage.