If you’re a first time buyer it can be difficult to work out exactly how much a lender will let you borrow. Every bank has its own rules, its own first time buyer affordability system, and its own way of looking at your income and spending. My name is Ian Smith, and I’m a whole of market mortgage advisor based in Essex. I help first time buyers understand their true borrowing power, avoiding the confusion that comes with trying to figure it all out alone.
Working with a whole of market broker like me makes a huge difference, because you’ll know exactly where you stand, before you even start. Some of the main questions I am asked at the start is : How much can I borrow, what is mortgage affordability, and what mortgage can I definitely get. Let me explain a little into how it works….
How Lenders Work Out Your Borrowing Power
Lenders don’t simply multiply your income and call it a day. They look at your full financial picture, including your income, deposit, credit history, and day to day spending. Most lenders work around X4.5 to X5 income, although some will stretch higher in the right circumstances to as high as 6, or even 7! Joint applications will increase what you’re able to borrow, but affordability checks still apply.
These checks look at bills, childcare, credit commitments and all essential outgoings. If you want proper first time buyer mortgage advice in Essex, this is exactly where I step in and make the process clear for you.
What Income Counts Towards a Mortgage?
Not all income is treated equally. Some lenders are flexible and happy to use different income types, while others are more cautious. Knowing which lender to approach can make a huge difference to your borrowing.
Self employed income (This can be calculated differently depending on the lender)
Basic employed salary (Gross and before taxes)
Overtime, bonuses and shift/car allowances
Commission and performance related pay
Regular benefits in some cases
If your income is variable or made up of different elements, using a broker like me becomes essential. I’ll also explain why income protection cover for homeowners is definitely worth considering.
How Your Deposit Affects How Much You Can Borrow
Your deposit plays a major part in determining your loan to value, interest rate, and overall affordability. A 5% deposit is usually the minimum for first time buyers, but a larger deposit opens up better rates, and more lenders. Gifted deposits are perfectly acceptable as long as they’re documented properly and within the correct criteria, you can’t just receive £5k, £10k or £20k from anyone. It has to be from certain people only. Don’t worry too much about this, as I’ve written a full guide on gifted deposits to help you understand exactly how they work.
Credit History and How It Changes Affordability
Clean credit gives you access to more lenders, and better rates. Minor blips are normally fine, but more serious issues can definitely reduce how much you’re allowed to borrow. Lenders look for stability rather than perfection. So if you’re applying for a mortgage with credit challenges, the lender you choose makes a huge difference. This is another reason why it’s so important to work with a broker like me who understands this properly.
How Your Spending Habits Influence the Amount You Can Borrow
Bank statements are a key part of affordability. Lenders examine your regular spending and any commitments that may affect your ability to repay the mortgage.
Direct debits and subscriptions
These can add up.
Childcare costs
This makes a big impact, and some lenders look at it very differently.
Gambling transactions
The smaller the better, none being ideal.
General spending patterns
Underwriters will take a close look.
If you want to know more, I have a full explanation of why bank statements matter for mortgage applications.
Tools That Give You a Quick Estimate
Online calculators are useful for getting a rough idea, but they don’t account for all the factors lenders use. They’re a helpful starting point, but nothing more. My mortgage calculator tool will give you a good initial estimate, and then I can work out the accurate figure based on your circumstances.
When a Mortgage Advisor Can Increase Your Borrowing Potential
This is where the value of a whole of market broker really becomes clear. Different lenders treat incomes and circumstances very differently. Knowing which lender is flexible with certain income types, which ones can go higher on income multiples, and how to package an application properly can make a noticeable difference to how much you can borrow. It also reduces the risk of declines and delays. If you’re unsure what a mortgage advisor actually does behind the scenes, I’ve written a full guide explaining it on my website.
Examples of How Borrowing Figures Can Change
Here are a few simple examples to show how borrowing can vary. These aren’t advice, just illustrations to help you understand how lenders look at different situations.
A single applicant earning £30,000 may be able to borrow roughly £135,00 to £180,000, depending on the lender.
A couple earning £55,000 combined could see a max loan anywhere from £245,000, to as much £330,000 depending on the lender, and what they want to do.
A contractor with variable income might be able to use their day rate with the right lender.
A buyer with a 5% deposit will have much fewer lender options, than someone with 10%
What You Need Before You Start Your Application
Getting organised early makes everything smoother and avoids unnecessary delays. Here’s what you’ll need:
I.D and proof of address (Current and not expired!)
Payslips or self employed accounts (SA302’s and Tax Year Overviews)
Bank statements (Full Copies not screenshots!)
Evidence of your deposit
A clear idea of your budget
When the time comes to progress to the full application, choosing a good solicitor for your purchase is also essential.
Conclusion
If you want clear and straightforward guidance on how much you can borrow, I’m here to help. I’m Ian Smith, a whole of market mortgage advisor based in Essex. I specialise in helping first time buyers understand their affordability, and secure the correct lender, right from the start.
With a broker like me you get certainty, accuracy, and proper support every step of the way. So what are you waiting for, book an appointment and let’s get started.
