Getting independent mortgage advice
If you’re in search of a new mortgage, independent advice can be worth its weight in gold. Find out what to expect regarding mortgage advice before you start.
Find out how much you could borrow
Use our mortgage borrowing calculator to get a rough idea of how much you could borrow for your first home, or if you're moving to a new one
While our affordability calculator will give you a rough idea of how much money you could take out for a mortgage, there are other aspects to keep in mind. In fact, lenders will want to know how you spend your finances as part of an affordability assessment.
The key things they'll look at are...
Credit score and history: This gives them an indication of how you manage your money and pay your bills, as well as help them understand if you'd be a reliable borrower
Personal income: Lenders will also need to know the amount you earn. With this information at hand, including any bonuses and tax credits, they’ll be able to offer you a mortgage that suits your needs and pocket
Your outgoings: Mortgage providers scrutinise how much of your monthly income you spend to evaluate the size of your deposit and how it was accumulated - including financial commitments like childcare costs, credit cards, and cars you have on finance.
As well as considering the key factors of your credit history, personal income and wider outgoings, there are other areas lenders will consider to see if you’re suitable for a mortgage. This includes:
If you’re a first-time buyer, lenders are likely to require you to have a deposit of at least 5%. A low deposit like this can be backed up using the government’s mortgage guarantee scheme; this way, the government guarantees the 95% loan providers give to buyers, with the aim of helping them onto the housing ladder.
Lenders will want to see exactly what income you have. If you’re buying with a partner or friend, they’ll assess affordability based on your combined income. Usually, lenders will offer up to 4.5x the total amount for a mortgage. Lenders will ask to see a P60, showing your annual income.
If you’re self-employed, you’ll need to provide evidence of two or three years’ worth of tax receipts, and possibly prove that your earnings will continue to grow. If you are out of work or claiming benefits, then you’ll need to rely on the earnings of a partner in order to secure a joint mortgage.
When assessing your credit score, lenders will also want to know about any outstanding debt, such as loans and credit cards. They’ll need proof that the cost of servicing this debt will not impact your ability to pay your mortgage every month.
There is no universal answer to this question, as it will depend entirely on your own financial situation. However, it’s always wise to borrow an amount of money that you can comfortably pay back, without having to struggle or stress in a few months’ time if you can afford the monthly payments.
With our affordability calculator, you can get a good idea of how your monthly repayments could affect your budget. Our calculator will show you what you can expect to pay back each month based on the value of your house, deposit, and interest rates.
When taking out a significant loan, it’s important to think about what may happen in the near future. With the UK’s current economic situation, you may have to deal with an array of increased expenses. So make sure to take all these factors into consideration. Also, don’t forget you’ll have to cover admin fees and possibly stamp duty, on top of your mortgage costs.
That said, do what feels right for you. MoneySuperMarket is always happy to help and support you with this crucial decision in your life.
Again, there is no right or wrong answer. However, it’s fair to say that with a larger deposit, you’ll need to borrow less money and will benefit from more favourable interest rates further down the line.
In this respect, lenders will keep a close eye on your loan-to-value ratio (LTV). LTV indicates the percentage of the property’s price that will be covered by the mortgage. So, if your property’s value stands at £300,000 and you have a 10% deposit (£30,000), your LTV will be 90%.
Some lenders will offer a wide range of options, including 95% or even 100% mortgages. But generally, the higher the deposit, the lower your LTV and interest rates, meaning that you’ll have to give back more manageable monthly repayments.
Therefore, you may want to check if increasing your deposit – even if only by a few thousand pounds – could lower your monthly repayments and get you a cheaper interest rate. A 10% deposit is a widely-accepted industry standard and will broaden the range of deals available to you.
Determining how much to borrow might be trickier for those who are self-employed. This is because you don’t have a fixed salary that you take home every month.
If you’re using our mortgage calculator, think about what your annual wage could realistically add up to. This way, you’ll have an initial idea of how much you could afford to borrow, including the possible cost of future repayments.
You may also want to use a mortgage broker, as they’re more likely to know what mortgage providers are looking for. Based on this, you’ll be able to identify those lenders who are more inclined towards lending money to self-employed homebuyers.
Fixed-rate mortgage: These feature an interest rate that remains the same for a set period. Generally, it's between two to five years, but you can also find fixed-term options of up to ten years or more. The advantage of fixing is that you’ll know how much you'll be paying each month and won’t have to worry about any rise in interest rates.
Variable-rate mortgage: With variable-rate mortgages, your monthly costs could change throughout your loan term. This is because your interest rate changes in line with the Bank of England’s base rate. For standard variable-rate (SVR) mortgages, each lender has an SVR that they can move when they like. SVRs can be anything from two to five percentage points above the base rate (or higher) and they can vary massively between lenders.
Discount mortgage: Rather than being linked to the Bank of England’s base rate, discount mortgages are linked to the lender's standard variable rate (SVR). For example, if the SVR is 4.50% with a discount of 1%, the payable mortgage rate is 3.50%. If the SVR rose to 5.50%, the pay rate would rise to 4.50%. Bear in mind that SVR changes are always at the lender’s discretion, meaning that your repayments could vary even if there has been no change to the Bank of England’s base rate.
If the mortgage results on our calculator are lower than you hoped for, don’t feel discouraged.
As mentioned, our mortgage calculator is only here to give you a rough indication of what you can expect to borrow. But more importantly, there are different ways in which you can find a way to gain a bigger mortgage.
Firstly, try saving up for a larger deposit. For instance, if a lender is only willing to offer you 80% of the property’s total price, you’ll need a deposit that can cover 20% of the house’s full cost. For the time being, you could spend less on entertainment and non-essential expenses. You may also want to consider living in shared accommodation with friends or moving back in with your family.
Alternatively, if you’re not able to save enough money, you could opt for a guarantor mortgage. This means you’ll need to find a guarantor, usually a parent or guardian, who will be responsible for payment of the mortgage if you are unable to cover the costs yourself.
What’s more, you could also speak to a broker, as they are bound to know which mortgage provider is likely to lend you a bigger mortgage than others.
At MoneySuperMarket, we compare mortgage products from over 90 lenders to bring you the best deals on the market. Just tell us a bit about yourself, your plans, and your property, and we’ll help you find the best solution for your pockets and needs.
By using our own mortgage calculator, you can gain an initial idea of how much you could borrow to purchase the house of your dreams.
MoneySuperMarket has won the Feefo Platinum Trusted Service Award, an independent seal of excellence, which recognises businesses that consistently deliver a world-class customer experience.
The salary you need to afford a house depends on the kind of home you’re buying and where you’re buying it, as prices vary depending on size and location.
As a rule of thumb, lenders tend to offer up to 4.5x your annual salary. If you’re buying with someone, they will combine your salaries to reach a figure they would be happy to safely lend.
For example, if you earn £30,000 per year, lenders will consider loaning you £135,000, multiplying your salary by 4.5x. If you and your partner both earn £30,000, lenders will multiply your joint salary of £60,000 by 4.5x, to reach a figure of £270,000. The latter would allow you to buy a £300,000 property with a 10% deposit of £30,000.
You can get a mortgage with bad credit. However, specific mortgages aimed at those with a poor credit history or lots of debt tend not to be advertised. Rather, they are offered on a per case basis, with lenders assessing your exact financial situation.
Be aware that if you have bad credit, lenders will likely charge a higher rate of interest and require a bigger deposit, in order to protect themselves in case you have trouble paying it off.
You can read more in our comprehensive guide to mortgages with bad credit.
While comparing rates and understanding what you can borrow with MoneySuperMarket is a great starting point, it always pays to go via a mortgage broker.
Brokers have access to the very latest deals, which often change day by day, and will be able to advise on the best lenders to approach depending on your circumstances. Best of all, they can speak directly with lenders with whom they have a good relationship, circumventing their algorithms and getting underwriters to understand your circumstances.
Mortgage brokers are paid a percentage by lenders when you take out a deal, meaning they don’t need to cost you a penny. And the deals they get will almost always be better than if you went directly.
