Below we have made a basic mortgage calculator so you can get an idea of what your mortgage payments may be depending on how much you borrow, the interest rate and over what period of time. The figures are purely illustrative and do not constitute any form of mortgage advice.
How much can I borrow?
We're often asked “can I borrow 5x my income for a mortgage” or “should I just multiply our joint incomes by 4?” Whilst income multiples exist in the background that lenders won’t exceed, it isn’t the sole driver of the amount you can borrow. The amount of money you can borrow on a mortgage is dependent on a number of things covered below.
1. The amount & frequency of your income - are you salaried or paid weekly? Do you earn overtime or receive bonuses or commissions & are they monthly, quarterly or annually, are you self employed and submit accounts at the end of the year or are you a limited company director and receive dividends?
2. The amount of credit commitments you have; so that’s debts such as loans, credit cards, car finance, store cards etc. Are these debts staying or being paid off before you buy the home, and if they're being paid off how will it be paid - mortgage lenders will often check that the debt has been paid off before completion by doing a final credit check if you say you will pay it off.
3. How many children, if any, do you have - it often costs a lot of money to have children & lenders make an assumption about that cost based on national statistics. We also might have to take into account the costs of childcare and nursery for example as well.
4. Any other income you receive - eg some people get child benefit, some have working tax, or child tax credit. Some people receive personal independence payments, there may be CSA or maintenance payments paid monthly to support a child - all of these can be taken into account in various combinations.
5. Your age & how long you can take the mortgage over in combination with your retirement plans. The longer you can stretch a mortgage, often the more you can borrow as the payment will likely be lower and therefore more affordable, however the longer the mortgage the more interest in total is payable so it’s a double edged sword!
As Mansfield's top rated award winning mortgage & protection brokerage our job is to look at all the above points & then to work out what your borrowing capacity is & what will be affordable - now sometimes this isn’t what a client wants to hear, nevertheless we have a duty of care to make sure you’re not stretching things financially. This can sometimes be a difficult discussion as a client can sometimes desperately want to buy a house & is adamant they can afford it, but as advisers we have to be cautious & look at what might happen in the future & determine that, if things change with interest rates would it remain affordable at that point because we never want to see a client in financial difficulty.
You see, there’s more to it than at first meets the eye, and it’s actually a very big financial decision that shouldn’t be taken lightly - which is why it always pays to have a chat with someone that knows what they’re on about.
We are independent mortgage brokers covering Mansfield, Sutton-in-Ashfield & Chesterfield. If you need a mortgage broker in Mansfield, mortgage broker in Sutton-in-Ashfield or mortgage broker in Chesterfield we're here to help.
It's so important to establish how much you can borrow before you start viewing houses
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We are independent mortgage brokers covering Mansfield, Sutton-in-Ashfield & Chesterfield. If you need a mortgage broker in Mansfield, mortgage broker in Sutton-in-Ashfield or mortgage broker in Chesterfield we're here to help
Mansfield Business Centre, Ashfield Avenue, Mansfield, NG18 2AE
09:00 – 20:00
Terms & Conditions
Lewis Shaw, FCA registration number 927754, trading as Shaw Financial Services, is an appointed representative of King Mortgages Ltd, which is authorised & regulated by the Financial Conduct Authority, FCA registration number 803561.
There may be a fee for arranging a mortgage. A typical fee is £499; however, this could be up to £998. Any fees will be discussed with you and agreed, in writing, prior to any work commencing.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Some forms of Buy To Let mortgages are not regulated by the Financial Conduct Authority. There is no guarantee that it will be possible to arrange continuous letting of the property nor that rental income will be sufficient to meet the cost of the mortgage.
The guidance &/or advice contained in this website is subject to the UK regulatory regime and is therefore restricted to consumers in the UK. As with all insurance policies, conditions & exclusions will apply.
THINK CAREFULLY ABOUT SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME (OR PROPERTY) MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Registered Office Address - Mansfield Business Centre, Ashfield Avenue, Mansfield, NG18 2AE
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