Mortgage Repayment and Affordability Calculator

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In a report on housing affordability, the Office of National Statistics (ONS) states that house prices in the UK have risen by more than 20% in the last 10 years. The report also highlights that mortgage payments are becoming increasingly unaffordable for many people. In addition, they note that mortgages are becoming less affordable due to low-interest rates and low wage growth.

Rising house prices and stagnant salaries have put a squeeze on first-time buyers, who are finding it harder to afford a home. The UK has been ranked 8th out of 10 countries for mortgage affordability by the International Housing Affordability Survey 2017. A recent study showed that the average salary is £2,000 less than the average house price.

Mortgage affordability is the key to getting into your first home. Homeownership has been proven to have positive effects on physical and mental health, promote financial stability, and reduce crime rates. However, over the past few years, the housing market has become less affordable for buyers because of declining wages, higher demand for housing, and interest rates.

Affordability can be calculated in several ways. The simplest calculation is to compare a monthly mortgage payment at a given interest rate with a household's monthly gross income. You can also use a more complicated mortgage affordability calculator, which looks at the total amount of money necessary for financing including the down payment and closing costs.

In most cases, mortgage affordability is calculated by using a percentage of the borrower's income. For example, most banks will only lend up to 28% of a person's monthly gross income for a mortgage. In addition, lenders often set their own limits on what types of homes they will provide financing for. For instance, some might only provide financing for homes that are worth less than £1 million or have a downpayment of at least 20%.

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*Lenders typically cap the loan-to-income ratio at around four-and-a-half times your annual salary.

Please note this calculator does not consider your credit score or other debt repayments which may affect your ability to get a mortgage.

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