How much can I afford to spend?

If you are thinking of moving from your current home to another property, you will first need to establish whether you have sufficient savings, equity, or assets to accommodate all of the necessary expenses associated with such an undertaking.

In order to do this, you will need to determine how much you are likely to achieve on the sale of your home (with at least three quotes from estate agents recommended before you proceed), how much your estate agent will charge to sell the property, the balance of your existing mortgage as well as the total cost of the new house (including, crucially, the cost of any solicitors or surveyors that will be needed to complete the transaction, the mortgage fees that will be charged by your lender, stamp duty costs, insurance costs and removal costs etc).

By subtracting these overall amounts from the probable equity generated by the sale of an existing property, you should be able to work out fairly accurately how much you will be able to use as a deposit on your new purchase.

This means that the more time taken at this early stage to research and to fully estimate fees and other relative outgoings, the better you will be able to plan your budget. For example, most experts advise potential movers to limit their monthly repayment amounts to no more than a third of monthly income (after tax) as the impact of any possible increase in interest rates could absorb your monthly surplus budget. It is also advisable to allow for at least 5-20% of the property total in advance of purchase as this reduces the amount you will have to pay back in the long-term and give you access to a wider choice of mortgage products.

A lender will establish the maximum you can borrow by conducting affordability calculations. The main aspects they will look at will be income and outgoings, a broad spectrum of outgoings will be considered dependent on lender, please take into account the following; credit cards, loans, pension, insurances, and childcare. Incomes that may be considered include and are not limited to; employment/self-employment income, pension income, investment income, benefit income.