Your mortgage is going to be a huge financial investment and something new to factor in to your budget and financial abilities. When deciding what mortgage to borrow both yourself and the lender will have to evaluate your current financial situation including any existing debt to decide what repayments you can comfortably make.

Before you start the mortgage application process you should know how much to expect.

Mortgage to Income ratio

It is sensible to keep this ratio as low as possible to ensure you will be able to sustain it. If you miss payments or cannot make the re payments you could have increased interest added on as well as more severe consequences such as repossession.

Using  no more than30-40% of your post-tax income for your mortgage is a popular method for home owners and mortgage lenders too.

Lenders will generally prepare to lend 4.5 times your annual salary.

For Example…

If your annual salary is £50,000 and you have no debts then your maximum mortgage will be £255,000.

If your annual salary is £30,000 and you have no debts then your maximum mortgage will be £135,000.

 

If you are applying as a joint holder with somebody else then the lender will review both finances and your mortgage loan could be higher.