Mortgage affordability calculator

Lenders factor in lots of financial information when working out what you can afford: your credit score, where you spend your money, what you earn, and more. But you might’ve heard the general rule that you can borrow up to 4.5 times what you earn.  

This is a good way to get an estimate, as most lenders use a loan-to-income ratio when calculating what they’ll lend you. This just means they divide what you want to borrow by how much you earn. (Then they’ll decide if you can afford it based on those factors we mentioned earlier). 

Ready to know more? Start the mortgage affordability calculator.

Mortgage affordability is a check that lenders carry out as part of the mortgage application process. It helps them work out what you can borrow. They’ll do a deep dive into your finances to get an understanding of where you spend your money. It helps them get an idea of whether you could afford to repay your mortgage based on your circumstances.  

When assessing affordability, a lender is looking to see whether you could cover a monthly mortgage payment alongside what you already spend. Each lender has their own set of criteria, but they look at similar things. They’ll scrutinise key areas of your finances, like:  

• Your loan: Lenders will look at the size of your loan compared to what you’re bringing in. They’ll decide if it’s affordable alongside your lifestyle. 

• Your work: It’s not just about your salary. They’ll also look at income from your pension, bonuses, any investments, and consider whether you’re self-employed. It all factors in.  

• Financial commitments: Lenders will want to know about any dependants you have, as well as other bills you pay regularly. So, credit cards, insurance payments, a loan for a car – they’re trying to get an idea of your living costs. 

• Credit score: Your credit score gives lenders a handy overview of your finances. They want to see that you’re responsible with money – and will pay back your mortgage. 

But like we said, every lender is different. They all have their own outline of what an ideal borrower looks like. Our advisors work with our lenders day in, day out. They have a good idea of each lender’s criteria, and can help you understand where you’re more likely to get accepted for a loan. Get in touch if you’d like to chat through the process. 

When you’re calculating your affordability for a house, there are a few things you can do to boost your chances. 

• Get ahead of the game with your credit score: It’s worth downloading your credit reports before applying. You can get an idea of where you stand and make improvements where possible. And if you spot anything that’s not right, you can start the process of correcting it. 

• Make sure you’re on top of your existing credit: Close any unused credit cards, and try to ensure your debts make up less than half of your available credit. And if you applied for a loan with someone else in the past, but you’re no longer together, you can de-link from them. That way, your credit is no longer tied to theirs. 

• Register to vote: It might seem unrelated, but it can actually be a dealbreaker for many lenders. It’s an easy way for them to run identity checks.  

• Keep your bills paid on time: You’re already under a microscope with your lender, so it goes without saying that you don’t want any recent defaults (unpaid bills) on your file. 

• Start being savvy about your spending: Lenders tend to ‘stress test’ potential borrowers. They look back on bank statements – usually 3 months’ worth – and examine what you’ve spent. And if you can stay out of your overdraft, that’s a plus in their eyes, too. It shows you’re not at the limit of your monthly budget.