If you need advice on how much you can borrow, give us a call or make use of the following rules of thumb:

Mortgage tips

• Don’t assume mortgage payments will be easier in future years. When inflation was high (8-10%), house prices and salaries increased and so mortgage payments became a lower percentage of salary. However, we now have low inflation and so the percentage of salary that your payments make up will only reduce significantly if your salary increases significantly because of performance or promotion – rather than inflation.

• The amount you can borrow varies from one lender to the next. You can typically borrow three times your gross regular income. For joint applications the rule is 2.5 times the combined income, or three times the highest income plus the other income. The lender will use the higher of these two calculations. Some lenders let you borrow up to four times one income or 3.25 times the combined income.

• If your income will be higher in the future, you may want the initial monthly payments to be as low as possible. Look for mortgages with discounted rate offers, long discounted rate periods, and a long loan period. But always remember that if your income does not increase, you may find your mortgage repayment unaffordable after the initial period.

• If you want the gaurantee of the mortgage to be repaid at the end of the mortgage term, then a repayment mortgage should be chosen.

• If you want the total amount of interest paid over the mortgage term to be as low as possible, look for mortgages with a shorter loan period. Although monthly payments will be higher, a shorter loan period reduces the total interest you pay. Also look for lenders with low standard variable rates. If you believe interest rates will increase, look for mortgages with a long fixed rate period as well.

• If you want to know exactly how much your monthly payments will be for the next few years, look for mortgages with fixed rates, a fixed rate period right for you, and competitive standard variable rates after the fixed rate period is over.