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Buying a property: how much could you afford?

Buying a property is a big financial commitment.

You want to be sure you’re comfortable in meeting the mortgage repayments and other costs involved in looking after a property. 

Before starting the mortgage application process, review your finances to make sure there are no red flags that might put lenders off.

Check your credit score to make sure there are no errors. You should also be familiar with your bank statements and prepared to explain transactions which your lender may not understand.

Explore: How to improve your credit score

Work out your income and outgoings

To give you a basic idea of what you can afford, work out how much money you have coming in and going out. 

The best way to do this is to look at your income for the last three months and compare it to your spending over the same time. 

This will give you an idea of how much you may be able to afford to save for a home deposit each month. It will also show how much you may be able to afford in mortgage repayments.

Explore: How to build a budget

Work out how much home deposit you can afford

To get a mortgage, you’ll typically need to contribute at least 5% of the price of the property as a deposit.

A larger deposit may give you access to cheaper mortgage deals and make your monthly repayments more manageable.

Look at how much you’re able to save each month, and how long you want to save for. Your budget and timeline will give you a rough idea of when you’ll be able to afford the kind of property you want.

Consider household bills as a homeowner

Your mortgage repayments will probably be your single biggest expense once you buy a home, but you’ll need to budget for other outgoings too. These may include:

  • utility bills

  • repairs

  • transport

  • Council Tax

  • broadband

  • home insurance

You should also set aside an emergency fund of at least 3 months’ worth of living expenses, to cover things like a burst pipe or faulty oven.

Understand what lenders look for

When you apply for a mortgage, you will go through an affordability assessment. Lenders have strict mortgage affordability criteria. For example, they will:

  • look at your income (you may have to provide payslips and P60 forms)

  • look at your expenses

  • check your credit history to determine how reliable you are at borrowing and repaying money

This affordability assessment is carried out so you only borrow what you can comfortably afford. 

Do a rough calculation

Use our calculator to get an estimate of the maximum amount you could borrow, based on your income.

Your home may be repossessed if you do not keep up repayments on your mortgage.