In 2026, first-time buyers can typically borrow between 4–4.5 times their annual salary, though some lenders offer up to 5 times. The exact amount depends on your deposit size (5–20%), credit history, and existing financial commitments. This guide explains how mortgages work, what you can afford, and how to navigate the application process.
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What Is a Mortgage?
A mortgage is a loan from a bank or building society to help you buy a property. You borrow a percentage of the property's value and repay it over time (typically 25–35 years), with interest.
Key terms:
- Principal: The amount you borrow
- Interest rate: The cost of borrowing (expressed as a percentage)
- Term: How long you have to repay (usually 25–35 years)
- Deposit: The amount you pay upfront (minimum 5% for first-time buyers)
- LTV (Loan-to-Value): How much you're borrowing as a percentage of the property's value
How Much Can You Borrow?
Lenders use a simple formula: your annual salary multiplied by a multiple (usually 4–4.5x). However, this is just a starting point.
| Annual Income | 4x Salary | 4.5x Salary | 5x Salary* |
|---|---|---|---|
| £30,000 | £120,000 | £135,000 | £150,000 |
| £40,000 | £160,000 | £180,000 | £200,000 |
| £50,000 | £200,000 | £225,000 | £250,000 |
*5x salary is available through some lenders but typically requires excellent credit and lower outgoings.
Factors That Affect Your Borrowing Capacity
- Deposit size: Larger deposits (10–20%) often secure better rates
- Credit score: Excellent credit = better rates and higher borrowing limits
- Existing debts: Student loans, car loans, and credit cards reduce your borrowing power
- Employment history: Stable employment strengthens your application
- Outgoings: Rent, child support, and other commitments are factored in
Types of Mortgages Explained
Fixed-Rate Mortgages (Most Popular)
Your interest rate is locked for a set period, usually 2, 3, 5, or 10 years. Your monthly payment stays the same, making budgeting predictable.
Advantages:
- Predictable monthly payments
- Protection from interest rate rises
- Easier budgeting and planning
Disadvantages:
- Rates are typically higher than variable rates initially
- When your fixed period ends, you're likely to pay more
- Early repayment penalties may apply
Variable-Rate Mortgages
Your interest rate can change with market conditions. Common types include SVR (Standard Variable Rate), trackers, and discounted mortgages.
Advantages:
- Lower initial rates than fixed mortgages
- Potential savings if interest rates fall
- Greater flexibility
Disadvantages:
- Payments can increase unexpectedly
- Harder to budget long-term
- Vulnerable to interest rate rises
Other Mortgage Types
- Tracker mortgage: Follows the Bank of England base rate, usually at a set margin above it
- Discounted mortgage: Lender's SVR minus a discount for a set period
- Interest-only mortgage: Less common now; you pay only interest, not principal
Getting Mortgage Approval
Step-by-Step Process
- Check your credit report – Ensure there are no errors before applying
- Get an Agreement in Principle (AIP) – A lender pre-approves you for a certain amount (valid 3–6 months)
- Find your property – Make an offer when you find a home
- Get a survey – Lender arranges valuation; you may want an independent survey
- Full mortgage application – Provide comprehensive financial information
- Underwriting – Lender verifies everything (typically 2–4 weeks)
- Mortgage offer – Lender confirms they'll lend to you (valid 6 months)
- Completion – Money is transferred and you receive the keys
Key Takeaways
- First-time buyers can typically borrow 4–4.5 times their salary
- Deposit size, credit history, and existing debts significantly affect your borrowing capacity
- Fixed-rate mortgages provide certainty; variable rates offer initial savings
- Start with an Agreement in Principle to understand your buying power
- The full approval process typically takes 8–12 weeks
Hidden Costs to Consider
Beyond your mortgage, buying a home involves additional costs:
- Stamp Duty: Tax on the property purchase (varies by location and price)
- Solicitor fees: Typically £800–£1,500
- Valuation fee: £150–£300 (sometimes waived)
- Surveys: £300–£800 for an independent survey
- Buildings insurance: Required by lenders; typically £150–£500 annually
- Home insurance: Optional but recommended; £100–£300 annually
Frequently Asked Questions
What's the minimum deposit for first-time buyers?
The legal minimum is 5%, but many lenders prefer 10–20%. A larger deposit usually gets you better interest rates and removes the need for mortgage insurance on smaller deposits.
How long does mortgage approval take?
From application to mortgage offer typically takes 4–8 weeks. The full process—from Agreement in Principle to completion—usually takes 8–12 weeks.
Can I get a mortgage with a poor credit history?
Yes, but it's harder and more expensive. You'll likely face higher interest rates and may need a larger deposit. Some specialist lenders work with people who have credit issues.
What happens when my fixed-rate period ends?
Your mortgage automatically moves to the lender's Standard Variable Rate (SVR), which is usually higher. You can remortgage to a new deal, switch lenders, or negotiate with your current lender.
Should I get a joint mortgage?
Joint mortgages can help you borrow more by combining incomes. However, both parties are legally responsible for the entire debt. Consult a solicitor to understand the implications.