How Much Can I Afford to Borrow?

The amount you can borrow as a mortgage is determined by how much deposit you can put down, and how much you can afford as regular repayments.

Factors to bear in mind

Income Multiplier

The amount that you want to borrow is expressed as a ‘multiplier’ of your income. So, if your income is £18,000 per year, and you want to borrow £54,000, the income multiplier is said to be 3 times.
Again, the loan is considered up to a maximum multiplier. A typical income multiplier for a single person might be 3 times income. For a couple it might be expressed as the higher of:

Example box

Husband’s income £18,000 per year
Wife’s income £10,000 per year.
1 times second income £10,000
3.5 times first income £63,000
3.5 times first income plus 1 times second income £73,000
2.75 times joint income £77,000

Length of expected occupancy
When considering how much you can afford, apart from taking into account the loan criteria, you should also consider how long you expect to be in the house. This will affect the term of the mortgage – i.e. the number of years over which it is to be repaid.

Further information

The Financial Services Authority produces tables comparing different products from various providers, on their website.

For more information about mortgages and regulations, visit the mortgages section on the Money Made Clear website, created by the FSA (Financial Services Authority). Alternatively see insurance b.