The amount you can borrow for a mortgage of course depends on your circumstances, so varies between people. If you are going to buy a home or remortgage with a partner this will increase the amount of money that you are able to borrow.
For many people they will find the refinancing mortgage hurdle to getting a mortgage nowadays is the deposit. If it has been a few years since you had to remortgage your home, you may have been able to get a mortgage without a deposit however the situation is very different. If you have an excellent credit rating and high affordability among other factors you may be able to get a 90% mortgage. For most you will probably need a 15-25% deposit which represents a huge some to save. If you are after a 150,000 pound mortgage, that translates into a 22,500-37,500 pound deposit. How many people have that kind of cash available?
Lenders are being pretty restrictive of their lending despite government intervention to attempt to get the property market moving again. Certainly how much mortgage you can borrow is dependent on being able to put up the deposit.
If it is a single application most lenders will loan you four times your income and for joint applications, the normal is three times the joint income. This is a guideline to give you a ball park figure of what you can expect however you should seek professional advice to get an individual illustration. Income is defined as your annual basic salary with a consideration taken for overtime, bonuses, commissions and second jobs although for some mortgage lenders this won't alter how much mortgage borrow to you. Other income that can be included in an application could be other regular monthly income like tax credits for example.
Some lenders do base their evaluations on affordability calculations. They feel this is more accurately than income as while income tells them how much you earn, they don't know all your commitments. So this method will help them better assess you and your circumstances.
Affordability testing involves taking your credit report into consideration along with any dependents you may have and if it is a single or joint application.
Chris Borthwick writes articles for the finance industry, mortgage refinancing mortgage and general alike. Recent articles were on using the services of a broker to get a fee free mortgage
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