We have a Mortgage to Suit You

There is no exact answer to this. The amount that you can borrow will vary greatly from institution to institution. A good rule of thumb is about 4-5 times your salary. If there are two of you, multiply your combined salary by the same.

Most lending institutions will not let you borrow more than 92% of the value of the property you plan to buy. So you should have some amount of savings prior to loan application. Recently, some institutions have started 100% mortgages but the terms and conditions are quite strict and relative mainly to affordable housing.

In the past, the amount you could borrow was simply calculated from a multiple of your salary. Nowadays most mortgage providers use a new method based on your net monthly take home pay (i.e. your monthly salary, less tax & less bills). This method generally allows you to borrow a greater amount.

Here's how it works

You are allowed to spend up to 35% of your net monthly take home pay on your mortgage repayments. Therefore, the largest mortgage you can afford is one that has monthly repayments no greater than 35% of your monthly take home pay. The amount you can borrow using this method will also depend on the current interest rates (thus vary from lender to lender) and any current debts you may have (as its based on your net take home pay).

In general there are two type of mortgage products available, annuity mortgages and endowment mortgages.

Annuity Mortgage:

This is the most popular type of mortgage (partially because it was the only one available until the 1990's). Each month you pay of a portion of the amount borrowed and the interest for that month. For the first few years your repayments are mostly made up of interest but as time goes by, you will pay less interest and more of the borrowings until eventually your entire loan will be cleared.

Interest Only Mortgage:

As it states, you pay just the interest element of the mortgage for a set period, however the principal remains to be paid.