Can You Afford To Buy Your Own Home?

can i afford to buy my own home

Whether you’re buying your first property, moving house or investing in a number of houses – you must check, you can afford to buy them before actually committing to them and wasting your time and money.

Working out what you can afford

Purchasing any property is a huge decision that requires a major long-term financial commitment, so think carefully about what you can afford. You ‘re going to need to weigh up the assets that you have – including investments – as well as the money that comes in and goes out.

While it can limit your purchasing choices, you don’t want to commit to a mortgage and then find that you can’t afford any of the finer things in your life! It might sound obvious, but you should take time to think about all the things you spend money on all year round, even without a mortgage.

borrowing money to buy a house

How much could I borrow?

Each lender has its own way to calculate how much they’re going to lend to you, or even whether they’re going to lend to you. The criteria include things like income, deposit size the size, regular expenses and your credit score. If you make a joint proposal, these will be considered for each of you.

But you can start by having a rough idea of how much you might borrow using our calculators.

Find out how much you can borrow from a fixed monthly budget

True loan amounts and affordability requirements can vary among borrowers. Before you agree to any mortgage, make sure you get correct data from your lender. Your home may be repossessed if you don’t keep your mortgage payments.

Helping you get an affordable mortgage

Current mortgage rules have been put in place to help ensure that customers borrow only what they can afford. When you apply for a mortgage, you will need to go into a lot of detail about your income and expenditure. At the end of the day, this is for your benefit, as a consultant or lender will then be able to recommend a product or service that best suits your needs and financial circumstances.

Consider other costs too.

Note, when you figure out what you can afford, there are other factors that you may need to take into account as well as the cost of the mortgage itself.

For example, if you get a mortgage, the lender will require you to take out building insurance to cover the property. If the property you are buying is in the UK and the costs are over £125k, you will be required to pay Stamp Duty. Stamp duty is a government tax on all homes costing more than 125k. There are many online calculators to enable people to calculate their stamp duty payments.

Similarly, if you buy a property in Scotland, if you’re property costs more than 145k, you may have to pay the Land and Buildings Transaction Tax. Different tax rates apply depending on the different property prices, so it’s worth looking at in advance.

Other things to consider are:

  • Cost of moving from your current home
  • Solicitor fees
  • Estate agency fees
  • Surveyor costs
  • Mortgage adviser fees and more

It’s a good idea to get your head around these costs into consideration early on, because they may have an effect on what you actually want to borrow.

Want a more concrete estimate?

In that case, it’s best to talk to the lender or the mortgage advisor. They’ll be able to take a look at your situation and advise you on what you might be able to borrow or make a Principle Agreement outlining the size of the mortgage you could get.

can self employed people buy houses

Are you self-employed?

Then the calculator won’t work for you as well. Your best bet is to talk to a mortgage advisor or lender to get a better indication of what you could borrow and what the repayments would be.

Investing in a buy-to-let?

Again, talking to a mortgage adviser or lender is one of the best ways to ensure you get an accurate estimate.

calculating mortgage repayments

What will your monthly repayments be?

What you can borrow is not the only thing to take into account. You should know how much your mortgage could cost you every month, so you can be sure that you can afford it comfortably.

Calculate your estimated mortgage payments

What if interest rates change?

Interest rates might well change – and if you’re on Tracker, Discount or Standard Variable Rate Mortgage, your payments might go up. It’s worth using a mortgage calculator like the ones on our site to check what your monthly payments would be if there were an increase in interest rates.

Consider all possibilities

When you work out what you can afford, remember that something unexpected can happen and things can go wrong. So it’s a good idea not to push yourself to the limit of your spending.

Instead, talk to your mortgage advisor or lender representative about how you would be able to make your payments in the event of redundancy, serious illness, or even in the unfortunate event of death.

Use A mortgage calculator to find out if you can afford to buy a home.

Use our mortgage calculators to see how much you can afford to borrow – whether you’re buying, remortgaging, buying to let or thinking about offsetting. Work out what your monthly and total mortgage payments might be before you commit to purchase. Click here to take a look at our mortgage calculator.

We hope you found the answers to whether or not you can afford to buy your own home, take a look around our site for other useful articles for first-time buyers and experienced property investors.

Whether you’re buying your first property, moving house or investing in a number of houses – you must check, you can afford to buy them before actually committing to them and wasting your time and money.

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