How much mortgage can you afford?

01

Separate borrowing capacity from a household budget

A lender considers income, outgoings, employment circumstances, credit information and the property when assessing an application. A salary multiple is therefore an incomplete answer. Different lenders can reach different decisions from the same starting information.

Your own budget has a different job: showing whether the payment leaves enough room for the life you expect to lead. Consider childcare, travel, dependants, regular savings and irregular annual expenses as well as contractual debts. Use actual statements to identify spending that is easy to overlook.

02

Work backwards from a sustainable monthly payment

Start with reliable take-home income. Deduct normal spending and commitments, then allow for home ownership costs and a buffer. The remaining amount is a starting point for testing a mortgage payment, not a promise that the lender will approve it.

For an illustrative household with £3,600 monthly take-home income, £2,100 of other spending and a £400 reserve, the amount left is £1,100. Those figures are illustrative budgeting inputs, not UK averages. Replace every figure with your own and include bills that will change after moving.

Test a repayment against your monthly budget

03

Separate the deposit from the rest of your cash

Create a cash allocation before choosing a price range. Label money for the deposit, purchase tax, legal work, survey, lender charges, moving and immediate repairs. Leave a reserve that will still be available after completion.

Loan-to-value compares the borrowing with the property value used by the lender. Your planned deposit influences that ratio, but a lender’s valuation may differ from the purchase price. Avoid assuming all savings can safely be committed to reaching a particular product threshold.

Build the completion cash budget · Check the purchase-tax allowance

04

Test the rate and term separately

Use an actual quote when comparing a product; otherwise clearly label the rate as an assumption. In the Greathome calculator the selected rate is held constant throughout the calculation. A real fixed-rate period may be much shorter than the full mortgage term.

Keep the loan amount fixed while changing the rate, then keep the rate fixed while changing the term. This makes it easier to see which choice creates the difference. A longer repayment term typically lowers the monthly amount while increasing the time over which interest accrues.

05

Plan for a less comfortable year

Try a higher payment, a temporary reduction in household income and an unexpected repair in your own budget. The purpose is to identify a weak point before taking on the commitment, not to predict future interest rates.

Ask what would happen at the end of an introductory deal and whether you would have options if circumstances changed. Compare fees, early repayment terms and the lender’s illustration rather than selecting solely on an advertised rate. The calculator does not supply live deals or personalised product recommendations.

06

Prepare the evidence and revisit the plan

Ask a lender or broker which income, identity, deposit and commitment documents they need. Check that the figures in the application agree with your records, and explain material changes rather than assuming an earlier indication remains valid.

Keep a dated copy of the budget beside the lender’s illustration. Update both when the price, deposit, term or product changes. If the workable monthly budget and the proposed borrowing do not fit, reconsider the purchase price or timing before stretching the assumptions.

• Confirm whether fees are paid upfront or added to borrowing.
• Budget for ownership costs outside the mortgage.
• Treat an agreement in principle as an indication, not a final offer.