Many people assume a mortgage is simply a multiple of their salary. Income matters, but it’s only the starting point. Lenders carry out a detailed affordability assessment to judge whether you can comfortably keep up repayments, both now and if circumstances change. Understanding what they look at can help you prepare, and avoid surprises when you apply.

Income: the starting point

Lenders will usually look at your basic salary first, then decide how much of any variable income they’ll count, such as overtime, bonuses, commission or allowances. Some will accept 100% of regular overtime; others will only use 50%, or none at all. If you’re self-employed, lenders will typically look at your last two or more years of accounts or tax calculations instead.

As a broad guide, many lenders cap borrowing at around 4 to 4.5 times income, although some offer higher multiples for certain professions or higher earners. The multiple is a ceiling, not a guarantee: the rest of the assessment decides how much you can actually borrow.

Your regular outgoings

Lenders subtract your committed spending from your income to see what’s left. They’ll ask about, and often check, things like:

• Loans, car finance and credit card balances
• Childcare costs and the number of dependants you have
• Maintenance payments
• Student loan repayments
• Regular household bills and living costs

Existing debt has a big effect. A few hundred pounds a month in car finance can reduce the amount you’re able to borrow by a surprisingly large sum.

Stress testing

Lenders don’t just check whether you can afford the mortgage at today’s rate. They also test whether you could still afford it if rates rose. Each lender uses its own stress rate, which is one reason why the maximum you’re offered can vary noticeably between lenders.

Your credit history

Your credit file shows lenders how you’ve managed borrowing in the past. Missed payments, defaults, high credit card usage or lots of recent credit applications can all count against you. It’s worth checking your credit report with the main credit reference agencies before you apply, so you can correct any errors and make sure you’re on the electoral roll.

Bank statements

Many lenders will ask to see recent bank statements. They’re checking that your income matches what you’ve declared and looking at your spending habits. Frequent use of an unarranged overdraft, gambling transactions or payments to undeclared credit can all raise questions.

How to strengthen your application

• Reduce or clear debts where you can before applying.
• Avoid new credit in the months leading up to your application.
• Keep your paperwork organised: payslips, P60s, accounts and ID.
• Save a larger deposit if possible, as a lower loan-to-value often opens up better rates.
• Speak to a broker early, because lenders’ criteria differ widely and the right lender for you may not be the obvious one.

Lending criteria and income multiples change regularly, so the figures above are a general guide only.

Your home may be repossessed if you do not keep up repayments on your mortgage.

We compare lenders across the whole market to find the ones whose criteria fit your circumstances, and we can give you a realistic idea of how much you could borrow before you start house hunting. Get in touch for a free consultation.