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Maximum borrowing on a mortgage?

How much you can borrow for a residential mortgage is based on your net income. Lenders will then take into account what your outgoings are and what they will be once the new mortgage starts.
Your income can include: basic income, regular overtime and commissions, income from pensions and investments, child benefit and any financial assistance from an ex spouse (maintenance etc.)

The lender will assess what affect they feel a possible interest rate rise might have on your ability to repay the mortgage, this is often referred to as a “stress test”.  Other “stress factors” might include: redundancy, having a baby or taking a sabbatical.

The property that you chose to buy will also have an affect on the amount that you can borrow. A lender will look to lend a maximum of 95% of the total value of the property to you, so even if your income would allow you to borrow more, you will only be able to borrow up to a maximum of 95% of the property value. The more deposit you put down, the more lenders will lend to you as you will be perceived as a lesser risk.

It is worth remembering that the more money you are planning to borrow against your property usually results in the interest rate being higher too. This is referred to as loan to value (LTV) and represents the percentage of the property you are borrowing. 

Different mortgage lenders will have differing lending criteria, so make sure you do your homework to make sure you are aware of all your options. For example, different lenders will look at lending you the money over different lengths of time as they have differing maximum age limits.

All in all, there are lots of factors that will affect the amount you can borrow and a simple multiplication of your salary won’t give the full picture, just a very rough guide.

Please note the content of this blog is for guidance purposes only and does not constitute for professional advice. Contact us today at or by calling 01473 216950.
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Thursday, 28 May 2020

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