How Much Mortgage Can I Get For My Salary?

09 June 2021

The mortgage process can be extremely confusing and complicated – especially for those who are first time buyers. Mortgage lenders go through extensive assessments and checks when deciding how much to lend and whether or not your mortgage is affordable for you long term. 

Here, we explain how lenders carry out these decisions and how the salary to mortgage ratio they use works.

How Do I Find Out How Much I Can Borrow?

A great place to start when researching how much you may be able to borrow is an online mortgage calculator. Online mortgage calculators are good at giving you an idea of your borrowing potential – however it’s important to remember that it is only an estimate. 

The calculator will then give you the potential mortgage amount you could borrow to buy a property, based on the information you gave.

Whether you can borrow that amount or not, will evidently depend on more in-depth assessments which your lender will carry out after you apply.

How Mortgage Lenders Assess Your Income

Your lender will require a lot of information regarding your income, debt levels and lifestyle habits when you apply for your mortgage.

1. How much you earn

If you’re employed, your lender will take your salary into account, as well as other income streams such as: 

 

2. Your outgoings

Your lender will offset any regular outings you have against your income, these include:

 

3. Repayment affordability

Your lender will perform a ‘stress test’ along with your income and outgoings. This includes looking at any future events that could affect your ability to pay your mortgage, including: 

 

What Your Mortgage Lender Requires From You

Your lender will undertake income and affordability assessments after you have provided them with a number of important documents, these include:

Your lender will also require:

 

What Salary to Mortgage Ratio Do Lenders Use?

The standard salary to mortgage ratio used by lenders is 4.5 times an annual salary. This means it is possible you could borrow 4.5 times your annual salary as a mortgage.

Therefore, if you earn £40,000 per year, you may be offered a mortgage of £180,000 – however, that is a simple equation that does not factor in debt or outgoings you may have.

Can I Get a Mortgage That’s Six Times My Salary?

Mortgages that are six times your annual income are very rare and only realistically reserved for high earners with no or very little personal debts. There are also likely to be maximum loan size restrictions on these loans, as well as maximum loan-to-value percentages and you will almost certainly pay a higher interest rate as well.

How Can I Increase My Chances of Getting a Mortgage?

The best way to boost your chances of being accepted by a lender and getting the mortgage you want is to lower your debt-to-income ratio (DTI). 

Lenders will calculate your DTI based on your earnings and level of debt, as part of their assessment.

If you reduce your debt before applying for a mortgage, you’ll reduce your DTI – making you more attractive to lenders.

To work out your DTI:

For example a monthly debt of £1,200 and a monthly income of £3,400 would result in a DTI of 35%. The lower your DTI, the more likely you will be approved for a mortgage

How Does a Loan To Value Affect Borrowing Potential?

Loan to value (LTV) is the percentage of your property’s purchase price covered by a mortgage. Therefore, the higher your LTV, the bigger the risk for your lender. By saving a larger deposit, you will lower your LTV and become more attractive to mortgage lenders.

 

2021

2020

Tayside housing market back with a bang 2020-12-10 Digital Guide 2020-05-27

2019

The property market across Scotland - Quarter Two 2019 by SPC Scotland 2019-10-16 LORD PROVOST OPENS NEW-LOOK CENTRE 2019-09-17 The Dundee property market 2019-06-24 A 427 MILLION BOOST FOR THE HOMES MARKET 2019-01-21

2018

Budget Proposals to the ADS Rate 2018-12-18 BUYING OR SELLING GET THE FACTS 2018-08-24 BUYING INTO LIFE ON THE WATERFRONT 2018-08-23 As moving day looms dont panic just prep 2018-05-17 THE BEST OF BOTH WORLDS FOR HOMEBUYERS 2018-04-03 HOME COMFORTS FEND OFF BEAST FROM THE EAST 2018-03-07 V&A DATE MILESTONE FOR THE WATERFRONT 2018-03-02 FLAT SALES EDGE TOWARDS £100 MILLION 2018-01-23 PROPERTY SALES PUSH TOWARDS THE £440 MILLION MARK 2018-01-08

2017

FESTIVE GREETINGS FROM ALL AT THE TSPC 2017-12-19 PUTTING DUNDEE ON THE MAP 2017-11-15 TIME TO BRING YOUR HOME TO THE MARKET 2017-11-01 AUTUMN IS A GOOD SEASON FOR SELLING 2017-10-17 HIGH PROFILE OPTION FOR TOP PROPERTIES 2017-10-09 MARKETING YOUR PROPERTY TO THE MAX 2017-08-21 DO YOU LIKE TO BE BESIDE THE SEA? 2017-06-15 TIME LOOMING FOR A RE-MORTGAGE 2017-06-09 HAS THERE BEEN A BETTER TIME FOR A HOUSE SALE 2017-05-26 TIME TO PUT YOUR FLAT ON THE MARKET 2017-05-04

©2000 to 2021 TSPC Holdings Limited and its licensees. All rights reserved. The content on this page is protected by intellectual property laws. Your use of this website is subject to our Terms of Use.

TSPC is the trading name of TSPC Holdings Limited, a limited liability company registered in Scotland No 279747 and Tayside Solicitors Property Centre Limited, a limited liability company registered in Scotland No 279746. The Registered Office of both Companies is 11 Whitehall Crescent, Dundee DD1 4AR.

About | Terms & Conditions | Privacy Policy | Cookies

Design: Plexus Media Ltd, Inverness | DJS Creative Marketing Ltd, Dundee | Credits

TSPC