If you are looking to remortgage, perhaps because you are looking to borrow a bit more, there are lots of online calculators that can help you get a better idea of what amount you will be able to borrow and also how much your monthly payments are likely to be on that amount of borrowing. The results of the online remortgage calculators only act as a general guide and you should get in touch with a mortgage advisor who will be able to tell you exactly how much you will be able to borrow and advise you on what the best deals are based on your individual circumstances.
How much money you can borrow is usually dependent on the following:-
- The value of the property that you are looking to remortgage
- The extent of any other financial commitments that you already have, for example credit cards, hire-purchase agreements, unsecured loans etc
- How may dependents you have
- Your earnings
- Any other sources of income you may have
- Your outgoings, for example your household bills, school fees etc
- Your credit history
- The equity in your property
Lenders can be selective about who they lend to and how much they lend to them and the Financial Conduct Authority requires them to carefully check mortgage affordability to ensure you could afford to pay. To do this, they undertake a mortgage affordability assessment, which considers all of the above.
The consequences of taking out a mortgage that you cannot afford can be very serious and in the worst case scenario a lender can repossess your home; this will mean that you will lose your home and your credit record will be damaged (which is then extremely difficult to repair).
As a general rule of thumb, borrowers can usually borrow four to four and a half times their annual income. If you are taking out a mortgage with another person, your affordability assessment will more than likely be based on your joint annual income.
