Frequently Asked Questions
How much can you borrow?
How much you can borrow depends on how much you can afford. Lenders will check this but you can too.
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 in the past offered to lend a sum based on a multiple of your salary (before tax) or your income if you were self-employed.
If you have other income such as bonuses, overtime, commission, pension income or tax credits lenders may take this into consideration.
It is more common now 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:
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your total income
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any monthly payments that you make for loans and credit cards
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household bills and living expenses.
Top tips
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Work out your budget first.
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Be clear about the whole cost of the mortgage – including fees.
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Don't be tempted to lie on your application form to get a bigger loan – it's fraud.
How much can you afford?
How much you can afford may change over time. Find out how to protect yourself against changes in circumstances and what you can do if things change.
Four main things affect what your monthly mortgage repayment will be. These are:
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how much you borrow
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the term of your mortgage
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the type of mortgage you have (interest-only or repayment), and
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the interest-rate deal you choose.
All these factors can vary, so use our mortgage calculator to work out what your repayments might be. Simply enter the information it asks, and see what a particular mortgage will cost you each month.
Always check the Annual Percentage Rate of charge (APR) and use it to compare mortgages. You pay back more than just the interest on the amount you borrow – other things may also affect the overall cost of the mortgage, such as administration fees, survey fees and insurance charges. The time at which the credit and other charges have to be paid back affects the rate of the charges and the overall cost to you. You’ll see the APR quoted in Section 5 of the about this mortgage document (also known as a Keyfacts illustration or KFI).
You can afford it now, but what if...?
You may be able to afford the repayments now, but think about what could happen if your (or your partner’s) income fell or if interest rates increased.
Your income could fall if you or your partner:
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lost your job(s)
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had to take a drop in income
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stopped work to have a child or look after a dependant, or
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became ill and couldn’t work.
Your mortgage payments could go up if:
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a special interest-rate deal ends – often special rates are for a set period only, so when this ends your payment will change to the lender’s standard variable rate
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your lender increases the standard variable rate at their discretion. Even if the lender sets a limit that the standard variable rate cannot go over, its terms may allow them to increase this limit after they give you notice, or
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interest rates increased – although setting interest rates is a commercial decision for firms, mortgage interest rates are related to the interest rate set by the Bank of England. It is at a historically low level, but don’t assume it will stay like this. A rise in the rate is likely to affect you, unless you have a fixed rate deal for the full mortgage term. If your interest rate deal is a standard variable rate, your lender may change the interest rate at their discretion.
Top tips
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Don't borrow the maximum on offer unless you’re sure you can afford it.
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Work out if you can still afford your mortgage if interest rates rise. Check
using our mortgage calculator if you can afford your mortgage if rates go
up by 1% or 2%.