FINANCE
When buying your first home,“affordability”isn’t simply about how much a lender is willing to lend you. It’s about how comfortably you can manage your mortgage payments alongside the rest of your expenditure What Does Mortgage Affordability Mean for a First Time Buyer?
KEY AFFORDABILITY CONSIDERATIONS 1= INCOME
As the saying goes, cash is King! Or maybe not… in terms of evidencing your income for mortgage purposes. Mortgage lenders have set criteria on what income they may or may not accept to support an application. It’s important to note, not all lenders have the same policies. The “best” kind of income for a mortgage application, is what lenders term “guaranteed income”. This covers things like salary from permanent employment and earnings from self-employment. “Non guaranteed income”, such as overtime or bonuses, is typically included only if received on a regular basis and most lenders will only factor in 50% of this. 2= COMMITMENTS Credit commitments impact your disposable income to cover your mortgage and other bills. Things like loans, car finance and credit card balances will usually affect the amount of money a mortgage lender will consider lending to you. As a first time buyer preparing for your first mortgage and purchase, if you are able to clear any credit commitments before your mortgage completes, this can work in your favour. Sometimes, clearing debt can actually improve your position more than saving additional deposit funds.
3= BUDGET
and not just survive! A useful rule of thumb is to focus on what feels affordable to you, not just what appears affordable on paper. Before applying, work out your monthly budget and consider how comfortable you would feel if household bills increased or interest rates changed. 5= WHAT IF I AM STRUGGLING TO FIND SOMETHING AFFORDABLE? If your dream property feels out of reach, you might want to consider Shared Ownership. If you are struggling to save for a deposit or are unable to borrow the amount needed from a lender, buying a share in a property can help with both of these elements (see table). Understanding your affordability early can help set realistic expectations, narrow down property searches and improve your chance of securing a home that remains affordable for years to come.
As well as paying your mortgage and credit commitments, you will need sufficient surplus funds to cover all other essential bills and lifestyle costs. Your affordability will usually be stress tested. This means that the lender will account for expenses, not just as they stand today, but based on anticipated increases to this over time. This offers some protection, should interest rates or costs increase.
4= WHAT DO YOU FEEL IS AFFORDABLE?
Just because a lender is prepared to grant a mortgage to you, this doesn’t necessarily mean it’s the right choice. A mortgage should leave room in your budget for savings, unexpected expenses and enjoying life. After all, you have worked so hard to secure your first home, you want to thrive
Property Value £250,000
25% Shared Ownership
Outright Purchase
5% Deposit
£3,125
£12,500 £1,275
metrofinance.co.uk
Mortgage Payment
£319 £460 £779
Your home may be repossessed if you do not keep up with repayments on your mortgage. There may be a fee for mortgage advice of up to 1% of the amount borrowed. A typical fee is £499, but this will depend upon your circumstances
Rent and Service Charge
N/A
£1,275
Total
Mortgage payments estimated using a 30-year term and interest rate of 5%. Shared Ownership rent costs estimated at 2.75% of unsold equity. Service charge example £30 .
116 First Time Buyer August/September 2026
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