Do Mortgage Income Calculators Work?

Not convinced that a mortgage calculator has given you accurate information? This guide looks at the workings behind a mortgage calculator - and why they're not always reliable.

About your mortgage

Error: Yearly income income must be between £1 and £10,000,000.

Error: Regular bonus must be between £1 and £10,000,000.

Based on your yearly income, you may be able to borrow:

£0

Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.

£0

Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.

£0

Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.

This calculator is an estimation of how much you could borrow. If you’re ready to take out a mortgage, speak to a Revolution brokers to see what options are available.

Do Mortgage Income Calculators Work?

Mortgage calculators are a quick, simple way to get a rough idea about how much you might be able to borrow, or how much a home loan might cost in repayments.

The challenge can be in telling which online tools work, and which are based on paid adverts - and which give the most accurate results!

Here we'll explain the pros and cons of online mortgage calculators, where they can help you, and where the pitfalls lie.

For an accurate idea about how your mortgage income calculations stack up, give us a call on 0330 304 3040, or email the team at info@revolutionbrokers.co.uk.

Where are Mortgage Income Calculators Available?

We have a range of mortgage calculators on the Revolution Brokers website. Alternatively, you can find lots of resources on financial advisory websites, and bank and building society websites.

Does a Mortgage Calculator Work Out what I Can Borrow?

Yes, a calculator will take your income and use generic calculations to give you an idea about how much you can borrow. The problem here is that the estimates are very rough, and the actual value available could be considerably different.

An online tool is only meant to be indicative, and can't take into account your eligibility - and can sometimes lead to making an application that will automatically be rejected since you don't comply with the lending policies of that particular bank.

How Do UK Mortgage Providers Calculate Affordability Assessments?

What a calculator cannot do is tailor the calculations to the lending criteria of any given provider - and these take into consideration many factors, including:

  • Your income.
  • What sort of employment you are in.
  • Your age.
  • Credit ratings and reports.
  • The type of property you wish to buy.

Typically, a lender will place a maximum of, say, four times your annual salary on the upper limit of what they can lend. In this case, you could borrow up to £100,000 on a salary of £25,000.

However, each lender is different, and while 4.5 times your salary is average, you can sometimes borrow as high as five or even six times your income with the right provider.

Joint mortgages can also significantly increase the amount you can borrow.

How Does my Type of Income Affect my Mortgage Application?

Again, a nuance that an online calculator cannot factorin is around the type of income you earn. Many people might have multiple incomes, or a variable income and not be able to calculate an average salary on the same basis as any given lender.

Income types might include:

  • Earnings based on bonuses or commissions.
  • Being self-employed.
  • Having PAYE employment but being on maternity leave.
  • Working as a contractor or on fixed-term contracts.

While you can input an average into a calculator, this doesn't know how your income is divided between income streams.

For example, some lenders will not include bonuses in calculating what they can offer. Some high street banks might automatically reject newer self-employed businesses if they do not have three years worth of trading accounts.

The only sure-fire way to get an idea about what you can borrow is to consult an experienced brokerwho can carry out independent assessments on your behalf.

How Do Mortgage Calculators Work Out my Averageincome?

As well as a basic salary, income can include all sorts of different elements, such as:

  • Overtime.
  • Employment allowances.
  • Second jobs.
  • Other revenue streams.
  • Commissions.
  • Bonuses.

Some lenders will happily include all of your income into their affordabilitycalculations - others will include 50%, and others none of it at all.

This is why a calculator should never be relied on to make decisions about mortgage lending since they cannot know which lenders are best suited to approve your application based on your income structure.

What Factors Impact my Affordability Calculation on a Mortgage Application?

Your income is one of the many factors that impact your affordability assessment.

Outgoings are also calculated to work out your net disposable income. They can include other loans and debts, paying for dependents, school fees, travel expenses, utility costs and council tax.

If you have multiple debts, and a high debt to income ratio, that can also impact your eligibility. So it is vital to know which lenders can approve an application at your level of borrowing.

Credit history is also a key metric, and the attitude of lenders varies significantly. Some will reject any applicant with any bad credit.

Others will approve an application but limit their offer to lend, usually requiring a higher deposit of at least 25%.

In some cases, a bad credit specialist lender is the best bet, as they have more flexible lending policies and will take a different view on bad credit ratings.

How Can I Calculate the Deposit I Need for my Mortgage?

As with the amount you can borrow, a calculator can give you a rough idea about the usual deposit value you will need.

However, this depends on the lender - and they might require a different level of deposit depending on how your affordability assessment pans out, your credit score, and what sort of property you wish to buy.

If you are buying a low-risk property, and have a clean credit history, you can find products with as little as a 5% deposit requirement, although these are not the norm.

Most lenders will need at least a 10% deposit, with the typical minimum being around 15% to 25% depending on your risk profile.

How do Affordability Calculations work for Buy to Let Mortgages?

With an investment mortgage, lenders will still need to run affordability checks - but these are less dependent on your annual income, and more reliant on the rental income achievable from the property in question.

Lenders will need to see that the anticipated rent will cover the mortgage interest payments by a certain percentage, depending on your taxpayer status (since the higher your tax bracket, the higher a profit margin the rent will need to achieve to be a viable business proposition).

In most cases, buy to let properties need to generate 125% to 170% of the monthly mortgage interest cost to be approved.

Professional Help with UK Mortgage Calculations

While online mortgage calculators are a useful way to gauge what you might borrow, they are not specific enough to give accurate information.

For help with working out what you can borrow, how much you can afford, and which lenders are best placed to approve your application, contact business loan broker on 0330 304 3040, or email the team at info@revolutionbrokers.co.uk.

As an independent, whole-of-market broker, we have access to every deal and every product and ensure you find the most competitive lending as quickly as possible.

Why Revolution Brokers?
  • Whole of market brokers

  • Mortgage that suits you

  • On time customer support

Further Reading

Latest Blogs

10 Feb 2022
Do I Qualify for First-Time Buyer Status?

Do I Qualify for First-Time Buyer Status? Working out whether or not you are a first time buyer may seem obvious - but there are plenty of scenarios where your position isn't clear! Examples might include: New buyers who have inherited a property they rent out. Buy-to-let investors that have never purchased a residential hom..

26 Jan 2022
How Does a Remortgage Application Work?

Most homeowners know that remortgaging means switching a mortgage from an existing lender over to a new deal. However, the process isn't always obvious. If you're on a fixed-rate deal, you'll want to get ahead of the end of the term to avoid being shuffled onto a higher standard variable rate where your interest costs will undoubtedly ..

17 Dec 2021
Understanding Lender Risk on First-Time Buyer Mortgages

Finding a great mortgage as a first time buyer can feel like an uphill struggle, with a larger proportion of applicants being turned down than a year ago. Around 20% of first-time mortgage applicants are rejected, usually because of the lender risk associated with their loan. Today, Revolution Brokers explains the highest risk facto..

28 Oct 2021
Pros and Cons of First Time Buyer Buy to Let Mortgages

Investing in a rental property can be an excellent way to get onto the property ladder and earn an income. However, if you haven't owned a residence before, you might find that a mainstream bank will automatically turn you down for a buy to let mortgage. In today's guide, the Revolution Brokers team explains how you can become a ren..

12 Oct 2021
Mortgage Deposit Requirements for First-Time Buyers

Buying a home for the first time is a massive step - but the deposit is often a stumbling block for first-time buyers. It can take years to save a sufficient amount or be impossible, so there are several ways to approach the problem and get your foot onto the property ladder. From April 2021, the UK government launched the new mortg..

24 Jun 2021
Why Property Auction Finance is Booming!

There is little doubt that UK buyer confidence is at an all-time high. We've recapped previously in our blogs how property market growth and prices have soared over the last few months! As we head into summer, one key area of mortgage finance seems to be expanding rapidly: property auction finance. In this article, the Revolution..

Offer!

Refer, Relax and get £50

If you refer a friend for a mortgage or any
type of finance you’ll both receive £25
each when their new application
successfully completes.

Know More!

We are proud
members of the:

FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

Ask the Mortgage Experts

Revolution Brokers understands that mortgages can be complex and confusing!

Ask us any question you might have, and one of our skilled consultants will come back to you as quickly as possible.