How much can I borrow for my first mortgage?

Looking to buy your first home in Scotland? With so much going on in the current financial climate, it can be difficult to know where you stand as a first-time buyer, and how much you might realistically be able to borrow for your first home.

This handy guide from the ESPC Mortgages team could help you to better understand how much you could borrow for your first mortgage.

What is your income?

The crucial element, your income will largely decide how much your lender will agree to loan you. Historically, mortgage lenders stuck to set income multipliers to generate your borrowing amount – such as a figure that was four or four-and-a-half times your annual income. However, the approach most lenders now take is more tailored to your individual circumstances and monthly expenses, to get a truer assessment.

How much deposit do you have?

When you apply for your first mortgage, your lender will factor in how much of a deposit you have saved. The bigger the deposit, the lower the risk you are determined to be, and therefore you may even be able to borrow a little more.

If you have saved a bigger deposit, your loan-to-value may be lower as a result (depending on the price of the property you are purchasing). This in turn affects your interest rate, so it’s worth saving as much as you can for your deposit.

What is your credit score?

A poor credit score can negatively impact how much you may be able to borrow. Your financial conduct – such as how you build up and clear debt – influences your credit score, but if yours is poor, you can find out ways to boost your credit score.

How much can you afford?

Despite what’s on paper when it comes to your salary, your affordability is the decider on how much you can afford to borrow. Affordability refers to how much you can realistically repay each month – and this is affected by your financial commitments and monthly expenditures, such as loan repayments, car finance, credit cards or even childcare costs.

Lenders may ask to see bank statements, so that they can assess your spending habits, to help them decide what your loan amount could be.

Use a mortgage calculator

To get a flavour of what you might be able to borrow, use a mortgage calculator. This will help you get a ballpark figure of what you may be able to borrow, so that you can start searching for properties with a realistic budget in mind. Be aware that mortgage calculators may not give you the same figure as a lender, so try to use it as a guide rather than a definite figure.

Get independent mortgage advice

Work with independent mortgage advisers who have the knowledge to analyse and advise which providers will look most favourably at your circumstances, but also ensure that any mortgage commitment is affordable, so that not only are we helping you to buy a house, but also helping you to keep it.

ESPC Mortgages can help with all aspects of understanding your budget, applying for a mortgage and dealing with the relevant insurance requirements. You can contact the ESPC Mortgages team on 0131 253 2920.

The initial consultation with an ESPC Mortgages adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £395 (£345 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.

The information contained within this website is subject to the UK regulatory regime and therefore restricted to consumers based in the UK.

The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren’t able to resolve themselves. To contact the Financial Ombudsman Service, please visit www.financial-ombudsman.org.uk.

ESPC (UK) Ltd is an Appointed Representative of Lyncombe Consultants Ltd which is authorised and regulated by the Financial Conduct Authority.