Mortgage Affordability:
How much can you borrow?

Mortgage Affordability Explained: How to Improve Your Chances with Mortgage One

One of the biggest frustrations for would-be homebuyers today is paying high rent—sometimes over £2,000 a month in cities like London—while struggling to get approval for a mortgage that would cost significantly less. This issue stems from how mortgage affordability is calculated. The good news? By understanding how this process works and taking the right steps, you can improve your chances of approval.

Mortgage One can guide you through this process, ensuring you’re on the best path to securing the mortgage you need, while helping you navigate the complexities of affordability calculations.

In this Article:

• What we mean by mortgage affordability

• How much you can borrow

• Mortgage affordability calculators

• How a broker like Mortgage One can help you

• Factors affecting mortgage affordability

• Mortgage affordability for buy-to-let

• Mortgage affordability for second homes

• Affordability when remortgaging

• How Mortgage One helps you find the right broker

What Do We Mean by Mortgage Affordability?

Mortgage affordability refers to whether you can comfortably repay the mortgage you wish to take out. The Financial Conduct Authority (FCA) requires lenders to perform an affordability assessment, examining your income, spending, and any outstanding debts.

Because falling behind on mortgage repayments can have serious consequences—such as losing your home or damaging your credit—it’s essential that lenders take this assessment seriously. However, these strict rules often mean you could be paying more in rent than what you would on a mortgage, yet struggle to get approved for the loan.

This is where Mortgage One can assist, ensuring you have the right advice to overcome these barriers and secure a mortgage that’s affordable and tailored to your financial situation.

How Much Can You Borrow?

Each lender uses its own method to determine affordability, but a general rule of thumb is that most borrowers can secure a mortgage of 4 to 4.5 times their annual income. If you have a particularly strong financial profile, you may be able to borrow up to five times your income. For example:

• If your income is £30,000, you could borrow between £120,000 and £150,000.

• On a combined income of £60,000, you might be able to borrow between £240,000 and £300,000.

Mortgage One’s brokers have access to the whole market and can help you find lenders who may offer you the highest possible amount—meaning you won’t have to settle for less than you need.

Mortgage Affordability Calculator

Wondering how much you could borrow? Use our mortgage affordability calculator to get a clear estimate of your potential borrowing power. Simply input your annual income to see how much a lender might be willing to offer you.

Mortgage One’s team is on hand to help interpret the results and explain your options, so you can confidently move forward with your mortgage application.

How a Broker Like Mortgage One Can Help Secure the Lending You Need

If you’re concerned about whether you’ll pass a lender’s affordability assessment, Mortgage One can provide valuable insights and guidance. Here’s how we help:

• Tailored Advice: We’ll assess your financial situation, offering advice on how different lenders will view your income, debts, and spending. If your mortgage application has been declined in the past, we’ll help you understand why and what steps to take to improve your chances.

• Whole-of-Market Access: Mortgage One works with a broad range of lenders. If one lender only offers you four times your income, we’ll help you find another who might offer you five times, securing the deal that works best for you.

• Practical Suggestions: We’ll provide tips on how to strengthen your mortgage application. You might have additional income sources, such as child maintenance or disability living allowance, that could be included in your application. We ensure no stone is left unturned.

Whether you need help maximizing your borrowing potential or navigating complex affordability rules, Mortgage One’s expert brokers are here to ensure you get the right mortgage for your needs.

Factors Directly Affecting Mortgage Affordability

Income is the most important factor, but several others can affect how much you can borrow:

• Debts: If you have large debts with high monthly repayments, it could reduce the amount you can borrow. Mortgage One can advise on whether it makes sense to pay down debts before applying.

• Spending: High outgoings on essentials like food, travel, or childcare can limit your mortgage approval amount. Mortgage One can review your finances and provide strategies to improve your affordability assessment.

By working closely with you, we ensure you have a clear plan for improving your financial profile before applying.

Factors Indirectly Impacting Affordability

There are several indirect factors that can also influence the amount you’re able to borrow. These include:

• Credit History: A strong credit record can open doors to better mortgage deals, while a poor history could limit the number of lenders willing to work with you. Mortgage One can help you identify and address any issues on your credit report to improve your application.

• Employment Status: Lenders often treat self-employed applicants differently, and fluctuating income can make borrowing more difficult. We’ll help you find lenders who specialize in working with self-employed borrowers or those with non-traditional income sources.

• Loan-to-Value (LTV): Some lenders offer higher income multiples if you have a larger deposit, reducing the LTV. Mortgage One can help you calculate how your deposit size might affect your borrowing options.

Mortgage Affordability for Buy-to-Let Properties

Mortgage affordability is assessed differently for buy-to-let properties. Lenders will base their decision on the rental income potential of the property, rather than your personal income. Mortgage One works with specialist buy-to-let lenders to help you get the best possible deal, even if you’re new to property investment.

Mortgage Affordability for Second Homes

If you’re buying a second home, affordability becomes more complex as you’ll need to demonstrate that you can cover the costs of both properties. Mortgage One can help you secure a mortgage with a larger deposit or work with specialist lenders who are more flexible with second-home buyers.

Affordability When Remortgaging

When remortgaging, you’ll need to pass a new affordability assessment. With rising mortgage rates, this can be tricky for some homeowners. Mortgage One can assist you in finding a lender who offers competitive rates and ensure you pass the affordability checks without any issues.

How Mortgage One Can Help You

Securing a mortgage that fits your financial situation can be complex, but Mortgage One is here to guide you. Our team of brokers will work with you to find the best mortgage options, ensuring you get the best deal available.

Conclusion

Understanding mortgage affordability can feel overwhelming, but with the right advice and guidance from Mortgage One, you can navigate the process with confidence. Our brokers are dedicated to helping you secure the mortgage you need, whether it’s your first home, a second property, or a remortgage. Get in touch with us today to start your journey toward mortgage approval.

FAQs

Why can’t I get a mortgage even though I’m paying high rent?
Mortgage lenders look at a range of factors, including your income, debts, and spending habits. Mortgage One can help you present the strongest possible case and explore lenders who may be more flexible.

How much can I borrow based on my income?
Most lenders will offer between 4 to 4.5 times your income, though Mortgage One can help you find lenders who offer up to six times your salary. How Much Deposit do I Need?

How does Mortgage One help with mortgage affordability?
We work with you to identify all potential income sources and reduce any barriers to affordability. Our whole-of-market brokers ensure you have access to the best mortgage deals.

Can Mortgage One help if I’m self-employed?
Yes, we specialise in helping self-employed borrowers find the right lenders who understand fluctuating income and non-traditional financial situations.