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Buying a property: how to work out how much you could afford

Buying a property is a big financial commitment and you want to be sure you’ll be 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 ensure there are no red flags that might put lenders off.

Check your credit score to make sure there are no errors and go over your bank statements to make sure you can account for any unusual transactions.

Explore more: 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 you’ve got coming in and going out. 

Explore more: How to build a budget

The best way to do this is to look at your earnings 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.

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, although a number of lenders are now offering 100% mortgages.

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 a month and how long you want to save for. Your budget and timelines will give you a rough idea of when you’ll be able to afford the kind of property you want, or whether you need to re-adjust your timings or idea of your dream home.

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 include:

  • utility bills
  • repairs
  • transport
  • Council Tax
  • broadband and phone contract
  • home and car insurance


You should also set aside an emergency fund 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 now have strict mortgage affordability criteria. They will:

  • look at your income (you’ll have to provide payslips and P60 forms)
  • look at your expenses (you’ll have to provide bank statements)
  • check your credit history to determine how much of a risk you are
  • stress test your ability to make payments (such as in the event of an interest rate hike or change in circumstance, like redundancy or having a baby)

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

Do a rough calculation

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

Things to consider

Think carefully before securing other debts against your home.

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

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