Here is why your bank may not give you the full picture
“How much can I borrow?” is one of the most common mortgage questions.
It is also one of the most misunderstood.
Many people assume lenders all work it out the same way.
They do not.
One lender may offer a certain figure. Another may offer less. Another may offer more. It depends on how they assess your income, debts, credit file, household costs and future affordability.
This matters because borrowing is not just based on income multiplied by a number.
Lenders look at your full situation.
They may treat overtime differently. They may average bonuses. They may cap commission. They may use net profit for a company director. They may use salary and dividends. Some may look at retained profit. Others may not.
Debts also matter. Credit cards, loans, car finance, childcare, maintenance and other commitments can all reduce the amount you can borrow.
Age and mortgage term can also affect affordability. A longer term may reduce the monthly payment, but it can mean paying more interest overall. A shorter term may save interest, but the monthly payment may be too high.
This is why online calculators can be miles away from the final answer.
They can give a rough guide, but they cannot replace proper advice.
The key is not just finding out how much you can borrow.
It is understanding how much you should borrow.
There is a big difference.
A mortgage needs to be affordable now, but it also needs to make sense if your costs change, your rate changes or your life changes.
Borrowing the maximum is not always the best decision.
Getting the right mortgage is about balance.
For personalised advice, speak to a qualified mortgage adviser.
Your home or property may be repossessed if repayments on a mortgage or loan secured on it are not made.
This post is for information only and not advice.
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