What Is A Salary-Based Mortgage Affordability?
Mortgage affordability tends to use your salary as a starting point. Lenders will calculate the maximum they can offer based on a multiple of your annual earnings.
However, there are multiple other factors to consider, including your credit rating, type of employment, and the deposit you have available.
Here we'll explore what factors impact the maximum mortgage you can apply for. If you'd benefit from independent advice, and expert support with negotiating your mortgage deal, give us a call on 0330 304 3040 or email the team at [email protected].
What Mortgage Can I Afford in the UK?
Lenders will start with your salary, and multiply it by their applicable rates to arrive at a maximum.
This calculation varies significantly between lenders - four or 4.5 times your salary is typical. Still, some lenders can offer as high as five or even six times your income, depending on how closely you meet their criteria.
The table below illustrates how significantly your maximum mortgage will vary depending on which lenders you apply to:
|
Annual salary
|
Lender A - 4 x Salary
|
Lender B - 4.5 x Salary
|
Lender C - 5 x Salary
|
Lender D - 5.5 x Salary
|
Lender E - 6 x Salary
|
|
£25,000
|
£100,000
|
£112,500
|
£125,000
|
£137,500
|
£150,000
|
|
£30,000
|
£120,000
|
£135,000
|
£150,000
|
£165,000
|
£180,000
|
|
£40,000
|
£160,000
|
£180,000
|
£200,000
|
£240,000
|
£240,000
|
|
£45,000
|
£180,000
|
£202,500
|
£225,000
|
£247,500
|
£270,000
|
As you can see, the amount you can borrow will be substantially different between lenders - so it is vital to consult an independent broker before making an application!
