How mortgage lenders work out how much you can borrow

Wondering how much you can really borrow for a mortgage? Discover how lenders calculate affordability, what reduces it, and how to improve your chances.

You have saved hard, checked the calculators, and got a number in your head. But when you sit down with a lender, the figure they offer is smaller than you expected.

It feels confusing, sometimes even a little unfair.

The truth is that lenders do not just look at your salary. They look at your whole financial picture.

Here is what that really means and how you can get yourself in the best position.

How Lenders Decide What You Can Borrow

Most UK lenders start with a multiple of your income, usually around 4.5x your salary. That is the starting point. They will also check:

• Your outgoings: loans, credit cards, childcare, car finance

• Your dependants: children and anyone who relies on your income

• Your commitments: pensions, subscriptions, student loans

• Your credit history: not just your score, but how you have managed money over time

The Real Impact of Outgoings

Here is a simple example:

• Sarah earns £40,000 with no loans. She may borrow around £180,000.

• Alex earns the same but pays £400 a month in car finance. His borrowing could drop by £25,000 or more.

It is not about punishment. Lenders need to see that you can comfortably afford the mortgage alongside everything else you already pay for.

Common Mistakes That Reduce Affordability

• Relying on online calculators that ignore outgoings

• Forgetting to include childcare costs or school fees

• Applying without reviewing your bank statements. Lenders always will

• Taking out new finance just before you apply

How to Improve Your Affordability Before Applying

• Pay down debts where possible

• Reduce unused credit limits. A £10k limit can still affect borrowing even if you never use it

• Tidy up your spending in the three to six months before applying

• Consider timing. If you know a big expense is temporary, a broker can explain this to the lender in a way that helps your case

The Bottom Line

What you can borrow is not just about your salary. It is about your whole financial story.

Understanding this upfront can save you disappointment and put you in a stronger position when you apply.

If you are ready to see what you could really borrow, let us work it out together.

Your home may be repossessed if you do not keep up repayments on your mortgage or other loan secured against it.

• Do all lenders use 4.5x income?

  Not exactly. Most use 4.5x, but some stretch to 5x or more in the right circumstances.

• Will childcare reduce how much I can borrow?

  Yes. Regular, essential costs like childcare are always factored in.

• Do lenders check my spending habits?

  Yes. Bank statements are reviewed to make sure your spending fits the mortgage you are applying for.