Check your budget - Mortgage

To buy a home, it’s likely you’ll need a mortgage. A mortgage is a legal agreement by a bank or other lender by which they lend you the money to make your home purchase. The amount you will be eligible to borrow is dependent upon a number of factors and calculating your mortgage eligibility is key in identifying your budget.

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When calculating the amount you can borrow for a mortgage you’ll need to consider a number of things.

First and foremost you’ll need to think about your annual salary. We’d always recommend looking at the latest market stats as this is subject to change, however commonly a mortgage lender will loan you four to four and a half times your annual salary (depending on a number of other factors too). They will also consider any other income you receive, including things like a second employment, freelancing, benefits, commission or bonuses.

The deposit amount you need will vary on the house your buying and whether you're using the fantastic Help to Buy: Equity Loan, a Government scheme which allows you to put down just a 5% deposit! 

A larger deposit, such as 10% or 15% deposit will result in lower monthly mortgage repayments or allow you to shorten your estimated mortgate term length.

Alongside your annual income, lenders will look into your monthly outgoings to make sure that the monthly mortgage payments are affordable for you and that what you are left with after your monthly spend is enough to cover the repayments. They’ll have a look into household bills, general spending and other debts such as credit cards or loans.

Interest rates can fluctuate according to what is going on in the housing market and wider economy, so the lender will carry out what they call a ‘stress test’ to make sure that you can still afford the payments if the interest rate goes up or if your personal circumstance was to change e.g. you needed to take maternity leave.

Another thing to consider is your credit score. Your credit score is a representation of how the financial world sees you and demonstrates how reliable you are financially. Checking your credit score before applying for a mortgage is always a good idea. Lenders will use this score to decide whether or not to lend you money for your mortgage. Your credit score can be checked by using tools such as Experian and Equifax and remember, the higher the score the better.


Your mortgage terms can be altered to suit your needs,  all of this can affect how much you can borrow and how much your monthly repayments will be. Commonly mortgages are capital repayments – meaning you’ll repay both your capital and interest on a monthly basis. But something key to consider when calculating your budget is the repayment period. The longer the period, the more spread out the capital repayment is, meaning your monthly rate will likely reduce.

If you’re ready to calculate your mortgage, use our mortgage calculator below.

Mortgage calculator

Find out how much you could spend on a new home with our clever mortgage calculator.

Speak to an expert

Chat online to our recommended mortgage specialists for no obligation advice on how much you could borrow.