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How much can you afford?

How much you can afford may change over time. Find out how to protect yourself against changes in circumstances and what you can do if things change.

Four main things affect what your monthly mortgage repayment will be. These are:

All these factors can vary, so use our Mortgage calculator to work out what your repayments might be. Simply enter the information it asks, and see what a particular mortgage will cost you each month.

Always check the Annual Percentage Rate of charge (APR) and use it to compare mortgages. You pay back more than just the interest on the amount you borrow – other things may also affect the overall cost of the mortgage, such as administration fees, survey fees and insurance charges. The time at which the credit and other charges have to be paid back affects the rate of the charges and the overall cost to you. See What is APR? You’ll see the APR quoted in Section 5 of the Keyfacts logo about this mortgage document (also known as a Keyfacts illustration or KFI).

You can afford it now, but what if...?

You may be able to afford the repayments now, but think about what could happen if your (or your partner’s) income fell or if interest rates increased.

How your income could fall
Your income could fall if you or your partner:

  • lost your job(s), or had to take a drop in income;
  • stopped work to have a child or to look after a dependant; or
  • became ill and couldn’t work.

How your mortgage payments could go up

  • Interest rate increases
    Although setting interest rates is a commercial decision for firms, mortgage interest rates are related to the interest rate set by the Bank of England. It is at a historically low level, but don’t assume it will stay like this. A rise in the rate is likely to affect you, unless you have a fixed rate deal for the full mortgage term. If your interest rate deal is a standard variable rate, your lender may change the interest rate at their discretion – see Types of interest-rate deals.
  • Special interest-rate deals ending
    Often special rates are for a set period only, so when this ends your payment will change – it could be much higher.

Protect yourself against future changes

  • Use the Keyfacts logoabout this mortgage document which your lender or mortgage broker will give you to see whether you can afford your mortgage in the future and if rates rise.
  • Use our Mortgage calculator and enter interest rates that are 1% or 2% higher than they are now to help you work out what your mortgage payments will be if interest rates rise.
  • Build interest-rate increases into your budget – work it out using our Budget planner .
  • Avoid taking the maximum mortgage on offer unless you’re sure you can afford it.
  • Consider a fixed rate mortgage so your mortgage payment will stay the same for a set period – see Types of interest-rate deal;
  • Work out how much you’d need if you lost your job – use our Budget planner to help you.
  • Build up your emergency fund – use our Savings calculator to help you meet your goal.
  • Find out what your employer provides if you become ill. By law, an employer must pay most employees statutory sick pay for up to 28 weeks but this will probably be a lot less than full earnings.

There are insurance products available to help protect your income or mortgage repayments if something goes wrong, and you may be offered these when you take out a mortgage. You should consider them but be aware that there are restrictions on when and how much they’ll pay out – see Payment protection insurance.

If you want a printed guide on keeping your mortgage payments affordable, you can read our Paying your mortgage guide. You can download or order it online at Free printed guides.

If your circumstances change

If things do change, it’s best to review your situation and work out your options. For example you can:

  • Look again at your financial priorities
    Use our Financial healthcheck to help you check your financial priorities.

  • Work out your new budget
    If your income has dropped or your costs have increased, use our Budget planner to find out how it affects your finances. If you plan to cut back, use our Cut-back calculator.

  • Consider if your mortgage is still right for you
    Use the Keyfacts logoabout this mortgage document to check its features or contact your lender to check if you cannot find this information. If your mortgage is no longer right for you, consider whether you should switch mortgages – see Remortgaging.

    But if you’re having problems paying your mortgage already or worried you could soon see Mortgage arrears and repossessions – top tips.

Top tips

  1. Don't borrow the maximum on offer unless you’re sure you can afford it.
  2. Work out if you can still afford your mortgage if interest rates rise. Check using our Mortgage calculator if you can afford your mortgage if rates go up by 1% or 2%.
  3. Plan your budget for now and the future by using our Budget planner.