How Much Can I Borrow
The amount you can borrow will depend on:-
- How much you earn.
- How much the property you want to buy is worth.
- How much the mortgage lender thinks you can afford.
Income Multiples.
Your "income multiple" is used as a guide as to how much a lender will be prepared to advance on a mortgage. As a very rough rule of thumb, the amount you are normally able to borrow to purchase a property will be three times your annual salary for a single applicant or for a joint application, 2.5 times the combined income.
There are exceptions to that rule and lenders will use an ‘Affordability Calculator’ which means income and expenditure is taken into consideration. This may mean you would be allowed to have more that 2.5 time income, however it may mean you would obtain less. It would be at the lenders discretion.
Some lenders will lend according to affordability as opposed to income multiples.
The above "income multiple" rule of thumb may be useful for the lender as a guide but it will tell you little about how much you can actually afford to repay.
The reason for this is because the rates used are a key factor in determining the affordability of mortgages. The lower the rate the less a given mortgage is going to cost you but if interest rates rise the actual cost to you each month will also rise.
Lenders are now much more realistic when looking at affordability and
will take a balanced view of both your income and expenditure.
Why not enquire now to see how we can help you?
Mortgage Calculator
Mortgage Calculator -Instructions
Loan Amount - enter the amount you wish to borrow not the purchase price.
Annual Interest % - If you know the interest rate you are able to obtain please enter that rate, if not 5% is an average rate (please note this is only a guide and cannot be guaranteed).
Loan Term yrs - enter the amount of years you wish to have the loan an average is 25 years however in certain circumstances you can have up to 40 years.
Then press calculate this will then give you two figures for the monthly repayments.
Monthly Repayment - this figure is for a 'repayment' mortgage this means each month you pay some interest off the loan and some capital (original amount borrowed) off the loan.
Interest Only Monthly Repayment - this figure is for an 'interest only' mortgage this means each month you only pay the interest off on the loan and the capital (original amount borrowed) remains the same throughout the term of the mortgage.
