Mortgages

It depends on a number of factors, including whether you’re a single or joint applicant, your salary, the amount of deposit you have, and your credit history. Each mortgage Provider uses complex calculators which take many variables, such as other significant outgoings and supplementary income sources, into account as well.
Many Lenders offer an income multiple of between 4 to 4.5 times your annual salary, though some will consider 5 times in other circumstances.

If you’re considered to be a less ‘risky’ applicant, a Lender may offer you a higher income multiple. However, if you have adverse credit and a low deposit, then they may offer you a lower multiple of your salary.

• With a capital repayment mortgage, your monthly repayments are calculated so you’ll have repaid all the debt and the interest over the term you agree (eg, 25 years). It means your monthly payments both cover the interest and chip away at the actual debt, so at the end you owe nothing. This has a strange effect. In the early years, your outstanding debt is larger so most of your monthly repayments go towards paying the interest. Gradually, as you reduce what you owe, most of your repayments go towards paying off the debt.
  
  
• With an interest-only mortgage you just pay the interest during the term. Your monthly payment doesn’t chip away at your actual debt (the amount you borrowed) – it just covers the cost of borrowing that money. So for example, when the term (eg, 25 years) is up on a £150,000 mortgage, you would still owe £150,000. You have to pay back the amount you borrowed in one lump sum at the end of the mortgage term. So if you get an interest-only mortgage, you NEED to have a separate plan to pay off your debt.

Usually you need to put down a minimum deposit of at least 5% of the property’s value. This will mean you have a 95% loan to value (LTV) mortgage. Coronavirus however has led to most Lenders only accepting deposits of at least 10%. This has made it harder to get a mortgage with a deposit of just 5%.