Mortgage in principle calculator
A lender deciding what to agree in principle runs two separate tests and offers you the lower of the two. The first is the income multiple, your gross pay times about 4.5. The second is an affordability check on your take-home pay after tax, debts and living costs, with the payment stressed at a higher rate. This calculator runs both and tells you which one is limiting your offer, which is the part other calculators leave out.
Which test limits you
4.5× your combined gross income of £0
What £0/month covers at a 7.5% stress rate
This is an estimate. Every lender uses its own income multiple, its own stress rate and its own confidential living-cost figures, so real offers vary between lenders on identical facts. Lenders also assess your credit history, employment type and the property itself, none of which are modelled here.
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Enter your deposit and property price to see your monthly payment, total interest, and how overpaying cuts your term.
OpenTake-home Pay
What you actually keep after tax, National Insurance, pension and student loan.
OpenHow this is calculated
- We add up the gross annual income of every applicant. Gross income is your pay before tax and National Insurance.
- We work out your income multiple cap by multiplying combined gross income by the lender's multiple. Most high-street lenders sit between 4 and 4.5 times income. The Bank of England limits how much of a lender's new lending can go out at 4.5 times or above.
- We work out your take-home pay using the current income tax and National Insurance rates for your region. This is done separately for each applicant, because income tax is worked out per person.
- We subtract your monthly credit commitments and your essential living costs from your take-home pay. What is left is what a lender treats as available for a mortgage.
- We apply the stress test. Lenders have to check you could still afford the payments if rates rose, over at least five years and by at least 1 percentage point. Where your rate is fixed for five years or more that requirement does not apply, so we use your actual rate instead.
- We work backwards from your available monthly income to the largest loan whose stressed payment it would cover. That is your affordability cap.
- Your mortgage in principle estimate is the lower of the two caps. We show both, and which one is limiting your offer.
Frequently asked questions
What is a mortgage in principle?
A lender's conditional statement of what it would lend you, based on the income and outgoings you declare and usually a credit check. Estate agents often ask for one before they take an offer seriously. It is not a mortgage offer, and the lender can still decline once it sees your documents.
Does a mortgage in principle affect your credit score?
Usually not. Most major lenders run a soft credit search for an agreement in principle, which only you can see and which leaves your score untouched. Some lenders and brokers run a hard search instead, and several hard searches in a short period can hurt your score, so ask which type will be used before you apply.
How long does a mortgage in principle last?
Typically 30 to 90 days depending on the lender. If it expires before you have an offer accepted you can usually renew it. Renewing means another check, so ask whether that one is soft or hard too.
Why did the lender offer me less than 4.5 times my salary?
Because the income multiple is only one of two tests. The lender also checks that you could still afford the payments if rates rose, using your take-home pay after tax and National Insurance minus your debts and living costs. When that second test produces a lower number, it is the one that sets your offer. This calculator shows both figures and tells you which one binds.
Can I borrow more if I fix for 5 years?
Often yes. FCA rules require lenders to test affordability against future rate rises, but that requirement does not apply where the rate is fixed for five years or more. Lenders can therefore assess a 5-year fix at the rate you are actually paying instead of a higher stressed rate, which can raise your maximum loan. Tick the 5-year box above to see the difference.
Do Scottish borrowers get smaller mortgages?
They can. Scottish income tax rates are higher than the rest of the UK above about £30,300, so a Scottish taxpayer on the same salary takes home less each month. Income multiples are unaffected because they run on gross pay, but the affordability test runs on take-home pay, so where that test binds a Scottish borrower may be offered less on an identical salary.
Borrowing the maximum a lender will agree is a decision about risk appetite rather than arithmetic, which is the subject this book handles better than any other.
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This calculator is for general guidance only. It does not replace advice from a mortgage broker on your personal circumstances.
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