Mortgage affordability calculator

A mortgage affordability calculator is a helpful tool if you’re thinking of applying for a mortgage, remortgaging or taking out finance.

It gives you some idea of your potential borrowing limit and indicates the number of lenders you are going to be able to approach. This can be particularly useful if your financial situation means you’ll need to take out a mortgage that’s worth, say, 5.5 times your salary. Naturally, your options will be more limited and it’s more likely you will have to go through a niche lender.

Establishing that you’ll be able to afford the mortgage you need provides you with peace of mind. It also helps when making your mortgage application.

How our affordability calculator works

Our mortgage affordability calculator uses a set multiple of 4.5 times your income and value of your deposit to work out how much you might be able to borrow. It is set at 4.5 because this is typically what lenders offer though this varies based on several factors, including the lender, your credit score, your age and the kind of property you are purchasing. More on these in a moment.  

UK lenders offer up to 95% Loan to Value (LTV), unless you use a guarantor product, so our calculator will cap your lending here. So, if you enter a deposit that comes in under 5% of the property value, the calculator won’t work.  

What affects mortgage affordability?

So, let’s look more closely at those factors that affect affordability for a mortgage.

Each lender will have their own set of criteria that you will need to satisfy. And although their benchmarks – criteria levels – might differ, there are some standard factors that lenders look at when deciding if and what they are prepared to lend. They include:

Affordability. All lenders will want to know your income and outgoings to make sure you can afford the mortgage repayments comfortably. Some lenders decide based on a minimum income requirement and others will use a maximum Debt to Income (DTI) ratio of approximately 40% - so, if you’re spending over 40% of your income on any other debts, you may find it more difficult to secure a mortgage.

Age. Many mortgages have a minimum and maximum age requirement. And your age can also impact how much you’ll be able to borrow as they will take the number of years you have left to repay your mortgage before you retire. For older applicants, there are specialist mortgage products.

Credit history. Each lender has their own idea on what they consider to be a level of adverse credit that they will work with. Most will want to look over your credit file to make you are not too high a risk – they will want to know that you are able to make your mortgage repayments.  

Deposit. How large a deposit – together with affordability – is one of the biggest factors used to work out how much you’ll be able to borrow. This will determine the Loan to Value (LTV) ratio of your borrowing. It will also be important to lenders that your deposit is from a reputable source.    

Property. The type of property you want the mortgage for can also affect the sum a lender will allow you to borrow. This will vary by lender. If the property you want to buy is a non-standard construction property or remotely based, you may find they’ll cap the amount they will lend. Or, if it’s in a poor state of repair, this too could impact how much you’ll be able to borrow.

See our mortgage affordability guide for more information.

How accurate is the affordability calculator?

When using our calculator, keep in mind that it is designed to give you a rough idea of what you can afford. It doesn’t take your unique personal situation into account. It is extremely useful for planning, though to establish exactly what you can afford and how to go about obtaining a suitable mortgage. Our brokers will be able to give you more definite and tailored advice.

How James Leighton can help

Our mortgage brokers can give you a much clearer idea on how much you can borrow. Offering a service that’s tailored to your current financial situation and hopes and dreams for the future, they will help you establish the most suitable route for you to take. They have whole of market access and deal with specialist lenders you may otherwise not find.  

Related links

See our repayment calculator to establish monthly mortgage repayments.

See our stamp duty calculator for help working out your moving costs.

See our overpayment calculator for seeing how you can pay your mortgage off faster.

Before you begin your property search, check out our easy-to-use affordability calculator above and then give us a call.