Financing your mortgage

How much you can afford will really determine what value of property you can move into.  Mortgage Lenders will determine the value of your mortgage offering based on your total annual income.  If you are looking to buy a property with a partner or friend then a combination of the salaries will be taken into account.

Mortgage Lenders will normally apply a multiplier that can range from 2 to 3.5 times your annual salary that excludes commissions etc to work out the amount you can qualify for your mortgage loan.  In many instances mortgages providers may apply a different level of calculation for a joint mortgage i.e. married couples where you may not be offered the entire 3.5 times your combined salary. 

In many instances mortgage lenders will require a particular level of deposit based on the value of the purchase for example, the lender may only offer you a mortgage based on a 20 per cent deposit, therefore if the value of the property is £200,000 then you will be required to provide £40,000 deposit.

As in most cases nowadays your lender will require evidence to warrant their mortgage offer and as a matter of cause you will need to provide information such as your wage slips for the last three months if you are in employment or details from your accountant to show your earnings for self employed.

Financing Example

Although the actual amount will vary from lender to lender the following example will provide you with an approximation and idea of the typical borrowing amounts.

Individual Annual Earnings - £35,000

Mortgage Offering Based on 3 times salary multiplier - £105,000

Financing Advice

Before you commit yourself to any mortgage it may be worthwhile bearing some of the following points in mind.

• Provide accurate information about your income.
• Borrow within your means, borrowing too much may create future problems and if you cannot keep up with your payments then you could be in risk of losing your home.

Mortgage Guide
Understanding mortgages Financing your mortgage Mortgage types Mortgage types explained What is HIPS? Choosing the right mortgage Mortgage protection cover Switching your mortgage	"Mortgage Lenders will determine the value of your mortgage offering based on your total annual income"