Beyond the Numbers – A Practical
Guide to Mortgage Affordability

Martin Green, Director, J&M Green Mortgage Services Ltd

Think your income is all that matters? Martin Green explains the factors lenders consider when deciding how much you can borrow

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My name is Martin Green from J&M Green Mortgage Services Limited on. With over 20 years’ experience and having helped arrange in excess of 10,000 mortgages, one of the most common questions I’m asked is: ‘How much can I borrow?’

The honest answer is that mortgage affordability can be an absolute minefield. Whether you’re employed, self-employed, part-time or full-time, every lender has its own way of assessing your income, and those criteria can even change between obtaining an Agreement in Principle and submitting a full mortgage application.

As a general rule, your mortgageable income is typically assessed at around 4.5 to 5.5 times your annual income by most lenders. While this provides a useful starting point, many other factors can significantly increase or reduce the amount you’re able to borrow.

One of the biggest misconceptions is that every lender will offer exactly the same borrowing amount. In reality, each lender has its own affordability calculator, using different criteria and assumptions to assess an application. Two lenders looking at exactly the same income, expenditure and credit profile can produce very different maximum loan amounts. This is why speaking to an independent mortgage adviser can be so valuable, as matching the right lender to your circumstances can significantly increase your borrowing potential.

Not all income is treated equally. Basic salary is generally straightforward, but when it comes to overtime, commission, bonuses, allowances or self-employed income, every lender has its own rules. Some will use 100% of additional income, while others may only use a percentage or require a longer track record before taking it into account. Self-employed applicants may also find that lenders assess salary, dividends, net profit or retained profits differently. Understanding how your income is assessed can make a substantial difference to the amount you’re able to borrow.

Your income is only one part of the affordability calculation. Lenders will also carefully consider your existing financial commitments, including personal loans, credit cards, car finance and other regular repayments. They’ll also take into account the number of financial dependants you have. Even relatively modest monthly commitments can reduce the amount a lender is prepared to offer, so reviewing your finances before applying can often improve your mortgage options.

With some lenders, choosing a five-year fixed-rate mortgage rather than a two-year deal can actually improve your affordability. This is because many lenders apply lower affordability stress tests to longer-term fixed-rate products, providing greater certainty over your future monthly payments. While a five-year fix won’t be the right option for everyone, it can be a useful solution for buyers who need to maximise their borrowing potential. It’s important to weigh up the increased affordability against factors such as early repayment charges and your future plans.

For buyers struggling to meet affordability on their own, a Joint Borrower Sole Proprietor (JBSP) mortgage can be an excellent solution. This allows a family member, often a parent, to support the application by adding their income to improve affordability without becoming a legal owner of the property. It can be particularly helpful for first-time buyers and younger applicants whose income alone isn’t quite enough. As with any specialist mortgage, it’s important to fully understand the responsibilities for everyone involved and seek professional advice before proceeding.

Mortgage affordability is about far more than simply multiplying your salary. Every lender has its own approach, and small differences in the way your income and outgoings are assessed can have a significant impact on how much you’re able to borrow. Taking advice from an experienced independent mortgage adviser can help you understand your options, avoid unnecessary setbacks and give you the best chance of securing the right mortgage for your circumstances.

Call 0151 230 0909 or visit gmsltd.co.uk for more information on how lenders would assess your affordability for a mortgage

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