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What mortgage can I get on my salary?

If you're wondering 'What mortgage can I get on my salary?', you're not alone. Solid information on mortgages, particularly for first time buyers, has become increasingly scarce since the crisis in the housing market and the tightening of lenders' belts.

That's because there has been a major upheaval in the way that banks and mortgage lenders assess borrowers. Despite claims to the contrary, many banks are simply more reluctant to lend mortgages - and the new method of assessing a potential borrower's income favours the banks.

To start with, consider how much deposit you will need. The traditional rule of thumb was that you could borrow up to 75% of the property value. In recent years, this was frequently reduced to 90%, and sometimes even 100%. But in today's market, we're seeing a return to the 75% to 80% value level.

Assuming that you have the deposit, regular income and a clean credit history, you may be able to borrow about three and a half times your annual salary. So for example, if you earn £20,000, you should be able to borrow up to £70,000.

However, this is no longer a straightforward calculation. Banks are now looking at both your income and your outgoings in order to assess how much you can afford to borrow. Borrowers with young children and a number of loans may have more outgoings than a single woman with no other financial commitments - so even if they earn the same salary, the single person is likely to be able to borrow a larger mortgage.

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