How Much Can I Borrow? Understanding Mortgage Affordability in Scotland

★ Key Takeaways

• Most lenders offer 4-4.5x your annual income, with higher multiples available for higher earners (up to 5.5-6x for those earning £100k+)
• Lenders conduct affordability assessments based on your income, outgoings, and ability to afford payments if rates rise by 3%
• Your credit file plays a crucial role – a clean credit history can unlock better rates and higher borrowing limits
• Joint mortgages combine both incomes, significantly increasing your maximum borrowing power
• A mortgage broker can help you find lenders offering the best multiples for your specific circumstances

"How much can I borrow for a mortgage?" is one of the most common questions I hear from first-time buyers and home movers across Scotland. It's a fundamental question – and the answer shapes everything from which properties you can view to how much your deposit needs to cover.

Understanding mortgage affordability isn't just about knowing a number – it's about understanding how lenders think, what factors influence their decisions, and how you can maximise your borrowing potential while staying within comfortable limits. In this comprehensive guide, I'll break down exactly how mortgage affordability works in Scotland.

Income multiples are the simplest way to estimate how much you might be able to borrow. The basic principle is straightforward: lenders multiply your annual gross income by a set figure to determine your maximum loan amount.

For most borrowers, this multiple falls between 4 and 4.5 times your annual salary. So if you earn £40,000 per year, you could typically borrow between £160,000 and £180,000.

However, higher earners often have access to more generous multiples:

• Earners over £50,000: May access up to 5x income
• Earners over £100,000: May access 5.5-6x income with specialist lenders

Income Multiples by Salary Level

For joint applications: Both incomes are added together before applying the multiple, significantly boosting your borrowing power.

While income multiples provide a useful starting point, modern mortgage lenders go much deeper. They conduct comprehensive affordability assessments that examine your complete financial picture.

What Lenders Consider

• Your income – Basic salary, bonuses, overtime, commission, and other regular earnings
• Monthly outgoings – Existing debts, credit cards, loans, childcare, and living expenses
• Deposit size – Larger deposits reduce lender risk and can improve terms
• Employment type – Permanent, contract, or self-employed status
• Your credit file – Payment history, credit utilisation, and any adverse marks

Stress Testing: The 3% Buffer

One of the most important aspects of affordability calculations is stress testing. Lenders must ensure you can still afford your mortgage if interest rates rise significantly.

Typically, they test your affordability at the current rate plus 3%. So if you're applying for a mortgage at 4.5%, they'll check you can afford payments at 7.5%. This protects both you and the lender from future rate shocks.

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Different lenders have different appetites for risk and criteria for lending. Here's how some major high street lenders typically compare:

Note: These figures are indicative and subject to change. Actual offers depend on individual circumstances and current lender criteria.

If you're self-employed, the affordability calculation works slightly differently. Most lenders will want to see at least two years' worth of accounts or tax returns to establish your income.

Lenders typically use either:

• Sole traders/partnerships: Net profit figures from your SA302 forms
• Limited company directors: Salary plus dividends, or sometimes share of net profit

Some lenders are more flexible than others with self-employed applicants – this is where working with a broker who knows the market can make a real difference.

Want to increase how much you can borrow? Here are practical steps you can take:

• Pay down existing debts – Credit cards, loans, and car finance all reduce your borrowing capacity
• Save a larger deposit – Better LTV ratios unlock higher multiples
• Apply jointly – Two incomes combined significantly boost your maximum loan
• Improve your credit score – A clean credit history opens doors to better deals
• Work with a broker – Access to lenders offering higher multiples for your profile

Can I borrow more than 4.5 times my salary?

Yes, many lenders offer higher multiples for certain borrowers. If you earn over £50,000, you may qualify for 5x income, and earners above £100,000 may access 5.5-6x with the right lender. Professionals in certain careers (doctors, lawyers, accountants) sometimes qualify for enhanced multiples too. A mortgage broker can help identify which lenders suit your circumstances.

How does a joint mortgage increase borrowing?

With a joint mortgage, lenders add both applicants' incomes together before applying the income multiple. For example, if you earn £35,000 and your partner earns £30,000, your combined income of £65,000 at 4.5x could allow borrowing up to £292,500 – significantly more than either could borrow alone.

Why was I offered less than I expected?

Lenders don't just look at income – they assess your full financial picture. High monthly outgoings (car finance, student loans, credit cards), a low deposit, or credit history issues can all reduce what you're offered. The stress test also plays a role – if your finances look tight at higher interest rates, lenders will offer less.

Should I borrow the maximum I'm offered?

Just because you can borrow a certain amount doesn't mean you should. Consider your lifestyle, future plans, and comfort level with monthly payments. It's wise to leave some buffer for rate increases, life changes, or unexpected expenses. Our step-by-step guide covers budgeting for all the costs of buying a home.

Understanding mortgage affordability is crucial for planning your property purchase, but everyone's situation is different. Online calculators give you a starting point, but nothing beats personalised advice from a qualified mortgage broker who can assess your specific circumstances.

At McGhie Mortgages, I help buyers across Edinburgh, the Lothians, and all of Scotland understand exactly what they can borrow and find the right mortgage for their needs. Whether you're a first-time buyer, moving home, or self-employed, I'll search the whole market to find lenders who offer the best terms for your situation.

Ready to find out exactly how much you can borrow? Book a free, no-obligation consultation and let's work out your budget together.