Have you ever asked yourself the question "Can I afford to buy a house" or "What mortgage can I afford"?
This calculator will help you determine whether buying a home with a mortgage is realistic taking into account your current finances.
|Date||Price||10% Deposit||5% Deposit||Report|
|Date||Price||10% Deposit||5% Deposit||Report|
This data is taken from the Nationwide House Price index and represents the average price of a house.
With a mortgage of £424,585.00 at 4.75% you are looking at repayments of £2420.63 per calendar month for 25 years1.
This is 71.20% of the net monthly income in your household.
After each payment, you will be left with £979.37 for other expenditure.
Most lenders will only lend up to 4.5x the gross income of your household2. This means to qualify for the mortgage, you will need to have a gross annual income of at least £94,352.22
With stricter lending rules that came into force 26th April 2014, lenders may also take into account your discretionary expenditure when deciding your eligibility for a mortgage3.
1 This is assuming the interest rate on your mortgage stays fixed.
2 Some lenders might only consider 4x or even 3x your gross annual income. Check with your lender to find out what their policy is.
3 See https://www.theguardian.com/money/2014/apr/12/need-mortgage-new-rules-lenders-check for more information.
4 See other costs for more information.
With mortgage repayments taking up 71.20% of your monthly income, you will be left with £979.37 to cover other life expenditure.
You need to seriously consider whether you will be able to keep up with the repayments. Especially when the interest rate on your mortgage is variable, any hike in rates could leave you in a financially difficult position (check out the things to consider panel to see how this might affect you.)
Even just a 1% raise would increase your monthly repayments to £2671.09 (78.56%.)
Remember that you will need money for: -
As well as taking into consideration: -
It's difficult to gauge what an appropriate percentage of your take home pay should be dedicated to servicing debts, as there isn't really that much of an official figure.
However the general consensous appears to suggest that 36% or below is the most advisable1.
This is how the ratings are determined2
|Rating||% of income|
|Affordable||36% or below|
|Acceptable||40% or below|
|Expensive||52% or below|
|Dangerous||greater than 52%|
2 These ratings are not to be taken as financial advice, they should just be used as a guide.
Buying a house is expensive.
Below you will find a rough guide to what you might come across when going through this process. Some expenses are easily quantifiable (e.g. Stamp Duty), but other are just estimates taken from sources such as this, so please treat this as a rough guide1.
(0.00% of £471,761.00)
|A tax paid to the government when you buy a property in the UK over a certain price. For more information, see this guide.|
|Solicitors Fees||£500 - £750 + VAT||This is to cover the legal work involved in purchasing a property, both buyers and sellers will require a solicitor to facilitate the transaction.|
|Mortgage Booking Fee||£0 - £250||Some lenders will charge you this to when applying for a mortgage, may be refundable should your application fail.|
|Valuation Fee||£150 - £1500||Most lenders will want to get the property valued to ensure it's worth the amount being applied for. On some deals this cost may be covered by the lender.|
|Searches||£250 - £300||Usually performed by your solicitor, this cost is to check with the local council any planning or local issues that may affect the property|
1 This is just a small selection of costs you may come across when going through the process. I heartily recommend this website https://www.moneyadviceservice.org.uk/en/articles/estimate-your-overall-buying-and-moving-costs to get a more detailed overview of the costs you will need to consider
|If your lender rose rates to||Monthly repayments would increase to||Leaving you with||Affordability rating|
|5.25% (+0.50%)||£2544.32 (74.83%)||£855.68||Dangerous|
|5.75% (+1.00%)||£2671.09 (78.56%)||£728.91||Dangerous|
|6.25% (+1.50%)||£2800.86 (82.38%)||£599.14||Dangerous|
|6.75% (+2.00%)||£2933.51 (86.28%)||£466.49||Dangerous|
|7.25% (+2.50%)||£3068.93 (90.26%)||£331.07||Dangerous|
|7.75% (+3.00%)||£3207.01 (94.32%)||£192.99||Dangerous|
|8.25% (+3.50%)||£3347.64 (98.46%)||£52.36||Dangerous|
|8.75% (+4.00%)||£3490.70 (102.67%)||£-90.70||Dangerous|
|9.25% (+4.50%)||£3636.07 (106.94%)||£-236.07||Dangerous|
|9.75% (+5.00%)||£3783.64 (111.28%)||£-383.64||Dangerous|
|10.25% (+5.50%)||£3933.28 (115.68%)||£-533.28||Dangerous|
|10.75% (+6.00%)||£4084.90 (120.14%)||£-684.90||Dangerous|
|11.25% (+6.50%)||£4238.38 (124.66%)||£-838.38||Dangerous|
|11.75% (+7.00%)||£4393.60 (129.22%)||£-993.60||Dangerous|
|12.25% (+7.50%)||£4550.46 (133.84%)||£-1150.46||Dangerous|
|12.75% (+8.00%)||£4708.87 (138.50%)||£-1308.87||Dangerous|
|13.25% (+8.50%)||£4868.72 (143.20%)||£-1468.72||Dangerous|
|13.75% (+9.00%)||£5029.91 (147.94%)||£-1629.91||Dangerous|
|14.25% (+9.50%)||£5192.37 (152.72%)||£-1792.37||Dangerous|
|14.75% (+10.00%)||£5355.99 (157.53%)||£-1955.99||Dangerous|
The purpose of this mortgage affordability calculator is to help people reason about their ability to afford a mortgage.
While its primary aim is to help first time buyers on average incomes calculate whether they can afford to buy a property, it may also help those who: -
Once you have inputted your information into the calculator, it will generate: -
I'm coming to that time in my life where I'm beginning to think about buying a house. The single most frustrating thing to me has been trying to wrap my head around the myriad of topics you need to learn about mortgages and how they work. So I embarked on writing this mortgage calculator to help me see whether buying could be a viable option considering my financial situation.
It is worth noting that there are plenty of similar mortgage calculators out there on the web that perform the same function, e.g.
Sure, but sharing spreadsheets isn't as fun as writing a website.
My name is Daniel Harper, I work as software developer in London.
For enquiries of a professional nature, you can try contacting me via methods listed on my personal website, however I cannot guarantee a reply.
Not in London, where I used to live.
But I've just recently completed on a house elsewhere in the UK :)