How Do I Pass Affordability Checks for a Mortgage Application?

If you're unsure about the affordability assessment linked to a mortgage or need confidence that your application is well within the approval policies, you'll uncover all the important information you need to know in this independent guide!

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:

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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.

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

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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.

How Do I Pass Affordability Checks for a Mortgage Application?

Affordability checks can cause a lot of concern for people seeking mortgage lending - but your income isn't the only crucial factor.

Let's look at how a lender will assess a mortgage application and how to improve your chances of approval.

For more help finding the best lending products for you, give us a call on 0330 304 3040, or email the team at info@revolutionbrokers.co.uk.

What is a Mortgage Affordability Assessment?

UK lenders need to make sure you can keep up with your mortgage repayments and afford the mortgage, you are applying for.

That includes looking at what you earn and spend and assessing factors such as your credit history and how much deposit you have available.

What is the Maximum Mortgage I Can Take Out?

Lenders each have their own policies and lending limits, but generally, the maximum you can borrow is based on a multiple of your annual income.

The typical maximum is around three or four times your salary, although you can borrow more and as much as six times your income in some circumstances.

Below you'll see a table showing different lender calculation bases, and what that means your mortgage maximum might be depending on which provider you apply to:

Salary

Lender A - 3 x income

Lender B - 4 x income

Lender C - 5 x income

Lender D - 6 x income

£35,000

£105,000

£140,000

£175,000

£210,000

£40,000

£120,000

£160,000

£200,000

£240,000

£45,000

£135,000

£180,000

£225,000

£270,000

£50,000

£150,000

£200,000

£250,000

£300,000

£55,000

£165,000

£220,000

£275,000

£330,000

£60,000

£180,000

£240,000

£300,000

£360,000

£65,000

£195,000

£260,000

£325,000

£390,000

£70,000

£210,000

£280,000

£350,000

£420,000

How Much Can I Borrow Through a Joint Application Mortgage?

The same scenarios apply for joint applicants - the lender will combine your income, and use that figure to calculate what they can lend.

What Other Factors Impact my Mortgage Affordability Assessment?

Income is one factor, but lenders will also look at the below:

  • Deposit - the higher the deposit, the less risky the application and the better the terms you'll be offered. Most lenders will want a 10% deposit, although some can accept as little as 5%.
  • Credit history - a clean credit history will improve your assessment. If you have bad credit, you can usually apply to specialist bad credit lenders, even if you have a severe credit issue such as a bankruptcy on your file.
  • Property type - non-standard properties can be considered riskier and more challenging to mortgage. For example, that might be a property with a thatched roof or a timber frame.
  • Your age - later life mortgages are a more specialist product, and many lenders cap their products up to age 75 or 85. Others have no limit, so it's essential to consult a broker to ensure you're applying to the right providers.
  • Employment type - self-employment or working as a contractor can make the affordability assessment more complex. Contact Revolution if you have a variable or complicated income structure and we'll get your application on the right track.
  • Living expenses - if you have other debts or dependents, a lender will need to assess your net income impact to make sure you can cover existing obligations and still keep up with the mortgage repayments.

How Much Can I Borrow on a First-Time Buyer Mortgage?

Most lenders use the same affordability assessments, whether you are a first-time buyer or taking out a mortgage to buy a new home.

The cap is usually based on three or four times your salary, although it can be as high as five or six times in the right circumstances.

There are also several different schemes to make it easier for first-time buyers to get onto the property ladders, such as Help to Buy.

Help to Buy offers an equity loan at zero-interest for the first five years, where you can borrow up to 20% of the value of a new-build property, using a 5% deposit to create a 25% total down payment.

That means needing a 75% mortgage, for a new-build up to £600,000 in value. There aren't any fees to pay on the equity loan, although if you don't repay it in the first five years - or refinance - then interest starts at 1.75% in year six and increases each year after that.

Your Help to Buy equity loan is a stake in the property, so if the home has increased in value by the time you pay it back, the amount you need to buy out the share will also increase. For example, if you buy a property for £100,000 and have a £20,000 loan from the government, then sell it for £120,000, you'll need to repay £24,000 in total since that is how much the 20% stake is now worth.

What Mortgage Maximum Can I Get on a Buy to Let Investment?

BTL mortgages work slightly differently to residential mortgages. You'll usually need a higher deposit of 20% to 40%.

Most buy to let mortgages are interest-only, so you pay only the interest element each month without repaying any capital. Therefore, you need to have a repayment vehicle in place to show how you're going to pay back the original loan.

Lenders will also need to know the anticipated rental income and how sufficiently that covers the mortgage interest payment. A stress test also applies, where the lender will need to check that if the interest rates rise or temporarily lose a tenant, you will still make the payments.

What Mortgage Can I Get to Buy a Second Home?

Second-home affordability assessments work like a residential mortgage, with things like your salary, expenses and credit file all being important.

Checks tend to be more rigorous for a second home since the lender needs to be sure that you can repay the loan even with a primary mortgage already in place.

In manycases, the Loan to Value on a second home is capped at 75% or 85%, so you'll need a deposit of at least 15% up to 25% and above.

What Can I Borrow on a Guarantor Mortgage?

A guarantor mortgage is an excellent way to get a mortgage if you were otherwise unable to meet the affordability assessments. In essence, you can buy a property with zero deposit, with a family member acting as your guarantor.

This security means that a lender has a back-up plan in place if you don't make a repayment - and in some cases, you can borrow a higher multiple of your salary with a guarantor.

What is the Maximum Mortgage I Can Get to Buy a Home in London?

While property prices are higher in London, the affordability checks will be the same as for anywhere else.

The only way that location has a significant impact is in the buy to let market. Lenders will check the anticipated rental income for similar properties in that area, and therefore buy to let loans may be easier to secure.

Professional Support with Mortgage Affordability Checks

If you're concerned about being eligible for a mortgage or need help finding lending having been turned down by a mainstream bank, we are here to help.

The business loan broker team is an independent, expert broker, available on 0330 304 3040, or via email at info@revolutionbrokers.co.uk.

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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.

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