How much can I afford to pay for a property?

The most important aspect you have to be sure of before buying a house is that you can afford the monthly mortgage repayments. Your home is at risk if you can't keep up repayments.

The general rule if you are buying a house on your own is to borrow 3 times your salary. You will need to pay an initial deposit of at least 5% of the total property price, more if possible. So if you earn £20,000 a year you will be able to get a mortgage for a property worth £65,000 - providing you can pay a £5,000 deposit.

If you are buying a house with a partner or a friend - you will be offered one of two choices. Either 3 times the annual salary of the higher earner plus the total second income, or two-and-a-half times the total joint income.

However, mortgage lenders are increasingly offering variations on these general rules as the mortgages marker becomes ever more competitive. Graduates for example are commonly able to borrow 4 or 5 times their salary, because the lender assumes their earnings will increase over time. If you have a good credit history and you have always repaid loans and credit cards on time then you may be able to negotiate more than 3 times your salary from some mortgage companies. However it's not a good idea to stretch yourself too much, if you're borrowing more than you can realistically afford you could have a lot of trouble making the repayments.

If you are unable to make any form of deposit, you can sometimes apply for a 100% mortgage. We have talked about this type of mortgage later on within the FAQ menu.

To find out how much you can afford then simply sit down and work out your monthly outgoings i.e. bills, car, entertainment and food, and see how much you can realistically afford to pay each month on a mortgage.