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How much can you borrow?

Lenders should lend responsibly. This means that they should consider whether you can keep up the mortgage repayments now and throughout the term of the mortgage; for example after an initial discount period ends. They should base this on things like your income, expenditure and other circumstances.

Mortgage lenders have traditionally offered to lend up to three-and-a-half times your salary (before tax).

If you’re buying as a couple they would normally include the smaller earner’s salary x 1.

Alternatively, many lenders have offered a couple’s total salary x 2.5.

Lenders may take into account:

  • If you have other money coming in, such as bonuses, overtime or commission. However, since it isn’t guaranteed income, lenders may only take into account half of this money.
  • If you already have lots of expenses, such as other loan payments, they will offer you less.

Recently it has become more common for lenders to make an affordability assessment when calculating how much they are prepared to lend you. Each lender will have its own method, but generally they will all try to calculate your disposable income, taking account of:

  • your total income;
  • any credit commitment such as loans and credit cards; and
  • household bills and living expenses.

If you have received advice from a mortgage broker, the firm advising you must recommend a mortgage that you are able to afford. Whether you receive advice or not, the lender must still lend responsibly. However, it's always worth satisfying yourself that you can afford the monthly payments - use our Budget calculator

Keep borrowing comfortable

  • Work out your budget using our Budget calculator to see how much money you’ve got coming in and going out and how much money you’ve got to spare.
  • Then you can also use our Mortgage calculator to see how much you will have to pay back each month at different rates on the amount you want to borrow. You can also put in rate increases to see how much your monthly repayments would go up if, for example, your mortgage interest rate increased by 1%.
  • Don’t overstate your income to get a bigger loan. If you lie about your income, you could end up with a loan you can’t afford and possibly lose your home. You’ll also be committing a fraud and could get a criminal record.

Top tips

  1. Work out your budget first.
  2. Be clear about the whole cost of the mortgage – including fees.
  3. Don't be tempted to overstate your income to get a bigger loan - it's fraud.