Check you can afford a mortgage

To work out how much you can afford to spend on a home, you need to work out:

  • Your total income

  • Your outgoings

Subtract your outgoings from your income to see how much you can pay on a mortgage each month. You can then avoid getting one with repayments you cannot afford.

You can work out how much you can spend on a home by using a mortgage cost calculator to enter a property value and interest rate and check how much repayments will cost.

There are many other costs when you buy a property on top of the mortgage. Here is how much buying a home can cost in total.

Will lenders accept your mortgage application?

Lenders have to carefully check your financial circumstances before they can offer you a mortgage. The Financial Conduct Authority's (FCA) rules means they have to make sure you can keep up with the repayments.

To work out how much you can afford to repay, they will look at:

  • How much you earn

  • If you are in permanent full time employment

  • Your outgoings and what you spend your money on

  • Your existing debts

  • If you have anyone financially dependent on you, like children

Lenders will also base their decision on:

  • Your credit history: This tells lenders how much you owe and how well you have managed debt in the past. Here is why your credit record matters and what it shows.

  • The deposit you have: The more you can put down as a deposit, the lower the risk for the lender. Putting down a large deposit will make it more likely you will be accepted and you should be able to get a lower interest rate too.

  • How old you are: If you are close to retirement you may only be offered shorter term mortgages and you usually need a larger deposit. Here is how to get a mortgage when you are older.

  • The property's value: The size of the mortgage you need affects whether lenders think you can afford to keep up with repayments.

  • The mortgage term: A shorter mortgage term means higher monthly payments, so you may only be accepted for a larger mortgage if you pay it off over a longer period.

  • If you apply on your own or jointly: If you apply for a joint mortgage you may be able to borrow more because the other person's income will be taken into account as well.

They also run stress tests to check you could still afford your mortgage if interest rates went up or your circumstances changed, like if you lost your job.

Use a mortgage affordability calculator to check how much lenders are likely to offer.

Work out your income

Add up the following to work out your monthly income:

  • Your salary, including regular bonuses and overtime

  • Benefits and tax credits

  • Any income from your pension

  • Money you get for child maintenance

  • Income from investments, including savings, shares and property

Work out your outgoings

Use a calculator like Nationwide's budget planner to add up how much money you spend each month.

Alternatively, work out your essential living costs and other spending yourself:

Calculate your living costs

  • Mortgage payments or rent

  • Credit card balances

  • Outstanding loans or overdrafts

  • Council tax

  • Insurance you pay for

  • Money you save

  • Pension payments

  • Student loan payments

  • Petrol and car maintenance

  • Travel fares

  • Electricity, gas and water

  • Internet and phone

  • TV licence and subscriptions

  • Food and drink

  • Clothes and accessories

  • Toiletries and cleaning products

  • Childcare

  • Child maintenance payments

  • School fees or costs

  • Pet costs

What else do you spend?

Add up how much you spend in an average month on:

  • Holidays and travel

  • Your social life, including restaurants and seeing friends

  • Entertainment like the cinema, music or sporting events

  • Gym memberships or other exercise costs

  • Buying cigarettes and alcohol

  • Luxury purchases or gifts for other people

How to afford a mortgage

If your income is currently too low to get a mortgage on the property you want, you could wait until your income is higher or try the following:

  • Get a cheaper property, as a lower purchase price means your mortgage payments will be lower.

  • Get a longer mortgage term, which reduces the amount you repay each month, but you will pay a higher amount overall. Here is how to choose your mortgage's term.

  • Cut your spending and unnecessary costs. Here is how to write a budget and spend less.

  • Find a cheaper mortgage because a lower interest rate can make the repayments more affordable.

  • Increase your deposit, which should help you get a cheaper mortgage. Here is how to save up a deposit.

Get the right mortgage

Avoid applying for too many mortgages if you get rejected because this can harm your credit record and make it harder for you to get accepted.

Getting the right mortgage for your circumstances can help you get accepted and come with lower costs than an unsuitable deal. Here is how to work out what type of mortgage is right for you.

You can get mortgages designed for:

Save on bills

Here is how to cut the cost of your: