Mortgages: how to work out how much you can get

Friday, 12 March 2010 12:00

One of the biggest life events for any person has to be buying your own house for the first time.

As well as the work involved in looking for a suitable place to live, there’s much to consider when it comes to financing the purchase.

The mortgage market can seem complicated to new buyers, particularly for those concerned about how much money they will be able to borrow and whether they will be able to afford the repayments.

However, there are ways and means of conducting the right research and working out roughly how much mortgage you can expect to get.

Using mortgage calculators

Online tools like mortgage calculators can be invaluable during the process of researching and obtaining a home loan.

All you have to do to answer the ‘how much mortgage can I get?’ question is input your salary and the calculator will return a rough estimate that should give you some guidance.

Other calculators are available to help you figure out things such as specific mortgage costs.

For example, if you put in specific details about a particular mortgage, you can find out how much repayments will be and how they will be affected if you take out a variable rate or tracker mortgage where the amount of interest you pay fluctuates over time.

Another online tool works out the savings you could achieve by overpaying on your mortgage, while one calculator tell you how much you will be likely to be able to afford to borrow from your lender.

Things to consider

When it comes to applying for a mortgage, it’s important to remember that each lender is different when it comes to things like fees, restrictions and the people they will lend to.

That’s why it can be a good idea to contact different banks directly after using a mortgage calculator to get a firmer idea of how much they may be willing to lend you and what the associated costs are likely to be.

Cheap mortgages may be something of a rarity at the moment due to the ongoing effects of the credit crunch, but if you shop around and are careful to compare products on every aspect you might just be able to find a suitable deal.

Fees and costs

Mortgages are subject to various fees and costs, making these some of the most important factors to research when applying for a home loan.

As well as interest rates, there may be arrangement and legal fees to consider – and don’t forget the spectre of stamp duty, which can vary depending on the value of the property.

One way of keeping the overall cost of a mortgage down may be to save for as large a deposit as you can manage.

The more of your new home’s value you can pay up front, the less you’ll have to pay in interest.

Your mortgage term may well be shorter, too – meaning that you might repay your loan sooner than you think.


Most mortgages require a minimum amount of money as a deposit before you can take out the loan.

It used to be that you could get away with a five or ten per cent deposit, but now you’re likely to have to put down a larger proportion of the value of your new property due to the credit crunch forcing lenders to become more strict about who they give money to.

That’s why saving as much as you can as soon as possible is a good idea – and you don’t necessarily have to stick to the minimum deposit, as you may be more likely to get a home loan with a higher amount of upfront cash.

Lender requirements

It can be difficult to pinpoint exactly what lenders look for when it comes to prospective borrowers, as each bank has its own requirements.

However, it may be safe to assume that they will likely prefer consumers with a sound credit history, a steady income and good budgeting skills.

While the credit crunch has tightened lending requirements somewhat, the market is starting to ease, especially for first-time buyers, so don’t automatically rule yourself out of the running for a mortgage until you’ve actually talked to a number of banks first.

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