How Much Can a First-Time Buyer Borrow?

Buying a home is a major milestone for many people, but for first-time buyers, the process can be overwhelming. One of the most important factors to consider is how much you can borrow. In the UK, there are several factors that determine how much first-time buyers can borrow for a mortgage.

Do you need additional help and information? Get in touch with Peak Mortgages today. 

Deposit

The first factor to consider is your deposit. The minimum deposit required for a mortgage in the UK is usually 5% of the property’s value, but some lenders prefer a deposit of at least 10%. The larger your deposit, often the more you can borrow.

Income

Your income is also a key factor in determining how much you can borrow. Lenders will look at your income to ensure that you can afford the monthly mortgage repayments. It’s not an exact science but in general, most lenders will lend up to 4.5 times your annual income. So, for example, if you earn £30,000 per year, you could potentially borrow up to £135,000. Some lenders will lend more and some less though

Credit score

Your credit score is another important factor in determining how much you can borrow. Lenders will look at your credit score to determine your creditworthiness and assess the risk of lending to you. If you have a high credit score, you may be able to borrow more at a lower interest rate.

Other factors

Other factors that can impact how much you can borrow include your employment status, monthly expenses, and any other debts you may have. Lenders will also take into account the property’s value, as well as its location and condition.

In summary, first-time buyers in the UK can typically borrow up to 4.5 times their annual income, but this can vary depending on their deposit, credit score, and other factors. To get a more accurate estimate of how much you can borrow, it’s important to speak to a mortgage advisor and get pre-approved for a mortgage. This will give you a better idea of your budget when house-hunting and help you avoid disappointment.

Are you looking at how much can a first-time buyer borrow, but need more information? Get in touch with Peak Mortgages today.