What size mortgage can I get and how much can I borrow?

How much you can borrow with a mortgage is determined by a number of things: how big your deposit it; how much you earn; your credit score; and your current debts, to name a few. You can use an online mortgage calculator to quickly get some guidance on how much you could borrow.

Whilst many first time buyers may want to get the biggest mortgage they can, it's important to think critically about how much you're borrowing and how much your mortgage will cost you.

Our friends at Bankrate have created a personalised, interactive guide to help you understand how much you can borrow and to help you get your finances in order to afford your first home.

Crucially, make sure you don't overstretch yourself. Try to ensure that your budget can handle increases in interest rates so you won't struggle if your repayments become more expensive. So what should you be looking out for?

Deposit and loan to value (LTV) ratio

Loan to value ratio is the size of your deposit against the size of your loan. This is one of the big deciders for how much you can borrow and how expensive your mortgage will be.

Typically you need at least 10% of value of the home as a deposit to get a mortgage, so to buy the average UK house of £180,000 you'd normally need at least a £18,000 deposit to borrow £162,000 and pay for the house.

However, with the government's Help to Buy scheme it is possible for first time buyers to get a mortgage with a smaller 5% deposit. So with a £10,000 deposit, it'd be possible to buy a £200,000 home.

It is worth noting that the bigger the deposit you can put down the lower your interest rates will be, and the lower the size of your monthly repayments.

Available LTVs:

Monthly repayments

Before you approach a mortgage broker or lender, you should consider if you can comfortably meet the potential monthly mortgage repayments for the sum you need to borrow. This is more important than getting the biggest mortgage possible.

It will be the size of the repayments that will decide whether you can afford your mortgage on an ongoing basis. If you think the repayments put too much strain on your budget, then chances are you won't be able to borrow that much.

Our mortgage comparison tables enable you to see the different monthly repayments you could have with different mortgages or different amounts.

Make sure to plan for the future as interest rates will affect the size of your repayments.

Current interest rates are at historic lows and likely to rise sometime in the future, meaning your monthly repayments are likely to go up, unless you use a fixed rate mortgage.

Affordability criteria

When deciding whether or not to lend to you most mortgage providers will assess your financial circumstances:

What's your income or salary to afford repayments?

Your income is key to the decision of how much a mortgage provider is willing to lend. You will need to be able to prove your declared income with payslips or other official documents.

Traditionally the size of a mortgage is decided by applying a multiplier to income, for example if you earned £25,000 a year, a lender might multiply this figure by four (it's rare to multiply income by more than this) to arrive at a mortgage offer of £100,000.

If your household has two incomes these are be typically be combined together in one of two ways.

Lenders tend to use whichever method results in the higher figure.

What are your outgoings?

Mortgage lenders will often also consider your outgoings when deciding how much to offer you. These include things like:

Your credit score

Your credit score is very important in determining your eligibility for any form of borrowing, and mortgages are no exception. All providers will thoroughly examine your credit report and make their decision based on your score.

Checking your credit report is important before applying for a mortgage, as you can check for errors and correct any you may find. If you have a poor credit score you can also discover the cause and take steps to improve your credit score.

Read more