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> Borrowing Capacity
Before looking for a house, you have to understand how much you can spend on it. To help give you a ball-park figure of your potential borrowing capacity, we recommend trying our simple Maximum Borrowing Calculator . This should help to quantify how much you should be able to borrow.
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Please bear in mind that there are many factors that can affect how much you can borrow and the interest you would pay. The main things to consider include; your salary, whether you put down a deposit (and the size of it if you do), your credit history and the Bank of England interest base-rate.
For example, consider a person that earns £25,000 net, each year.
If he has monthly outgoings of £500 per month and no other income, the Maximum Borrowing Calculator shows that most banks will offer this person a loan of £100,000, and a few borrowers would give a mortgage of £125,000.
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Now that you have some idea of how much you can spend, you need to start thinking about what you are looking for in your new home. In the next section,
Finding a House, we talk through some of the factors you should consider when deciding on the right house.
Buying vs Renting << | >> Searching for a House
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