Whether or not you are able to take out a mortgage depends on your ability to repay the loan, or rather, your lender’s confidence in your ability to repay.
There are stringent checks in place when applying for a mortgage. Lenders will check that you can afford repayments should interest rates increase, or your personal circumstances change. You must prove your income, and will often undergo questioning about your outgoings. We have more on preparing yourself for mortgage applications here.
How Mortgage Loans Are Calculated
It used to be that lenders calculated the amount that you could borrow as a multiple of your income (loan-to-income ratio) and could be anywhere between 3 and 5 times your income, but now the loan-to-income ratio is capped at 4.5 times your income and takes into account personal and living expenses as well as income. This is called an affordability assessment and you can see the types of expenses taken into account here.
If you would like to explore your mortgage options, please get in touch. Our experienced advisers will work with you to tailor the best mortgage option for your circumstances and help you secure your perfect home.