Home Affordability Calculator

What a lender will offer is not what you can afford

Affordability calculators from lenders answer a different question: the maximum they are willing to risk. That figure assumes you will prioritise the mortgage above everything and says nothing about pension contributions, childcare, holidays or saving. Borrowing the maximum offered is how households end up house-rich and cash-poor, unable to absorb a boiler replacement without credit.

The costs left out of the headline

The mortgage payment is roughly 60 to 75 percent of the true monthly cost of owning. Add property tax or council tax, buildings and contents insurance, and service charges or ground rent on a leasehold. Then maintenance, which averages 1 to 2 percent of the property value annually across the long run, lumpy rather than monthly: nothing for three years, then a roof. Budgeting only the mortgage is the single most common first-time-buyer error.

Upfront costs beyond the deposit

Stamp duty or transfer tax, legal fees, survey, mortgage arrangement fee, removals, and the immediate spending every move triggers on furniture and repairs. These commonly run to several percent of the purchase price and must come from savings that are not your deposit. Spending every last pound on the deposit leaves nothing for the moving costs and no reserve afterwards.

Stress-test the rate

Run the numbers two or three percentage points above the rate you would take today. A fixed period ends, and if the payment at a higher rate would be unmanageable, the purchase is too large regardless of what is affordable now. Lenders apply their own stress test, but theirs protects them rather than you.

The deposit changes the price, not just the loan

Crossing a loan-to-value threshold, typically at 90, 85, 80 and 75 percent, moves you into a better rate band. A slightly larger deposit that crosses a boundary can reduce the rate on the entire loan, which is worth far more than the same amount reducing the balance within a band.

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