If you’re a first-time buyer, one of the first (and most important questions) you will be asking is how much you can afford to spend on your home.
In most cases, the amount you can afford will depend on the amount you can borrow from lenders and mortgage providers.
Your affordability is important as it will determine what type of property you can buy, as well as what location you may be looking at. For example, sought-after areas may be more expensive to buy in than other areas. Meanwhile, properties with more bedrooms, recently renovated or have certain characteristics may cost you more.
And there are two factors you need to consider when thinking about affordability.
You will need to think about how much you can borrow from lenders overall, and also, how much you can afford to spend on the monthly repayments.
Various factors can impact your borrowing power, such as how much you earn, how much you have saved for a deposit, whether you will be buying the property alone, and how long you want your mortgage term to be. Lenders may also look at other factors such as, if you have a good credit score, or if you’re paying off any debts.
Interest rates can also impact how much you can borrow, as the higher the interest, the more expensive your repayments will be every month (unless you have a fixed rate).
Mortgage calculators
The best way to work out how much you can borrow is by using an online mortgage calculator. By inputting information such as how much you earn, any debts or loans you are paying off, if you are buying with someone else, or have any dependents, it will give you an estimate of how much lenders will borrow.
It may also give you an estimate of how much your monthly repayments will cost based on the current interest rates.
Many banks and mortgage providers will have a mortgage calculator on their websites. We have rounded up some below:
- Mortgage Calculator: How Much Could You Borrow? – Halifax UK
- Lloyds Bank – Mortgage Finder
- Mortgage Calculator UK: Repayment & interest only mortgages – MSE (moneysavingexpert.com)
Once you have worked out an estimate of how much you can borrow, and you’re ready to start looking for a property within your price range, you may want to apply for a mortgage in principle. We recently wrote about mortgage-in-principles in detail here.
At Oakwood Property Solicitors, we are happy to assist with the purchase or sale of your property. To see our full range of services click here.
Further reading
Purchases – Oakwood Property Solicitors
WHAT TO DO NEXT
To make a start on the next step in your property journey, get in touch today to book a consultation with a member of our team. Call us on 0113 218 5727 to find out how we can help you.
