How Much Can You Actually Borrow? What Lenders Are Really Checking Right Now

Rates ticked up again this week. Several of the big lenders nudged their fixed deals higher, and the average two-year fix now sits around 5.09%, with five-year fixes not far behind at 5.12%. That's despite the Bank of England holding the base rate at 3.75% for a fifth meeting in a row on 30 July, a decision that wasn't as comfortable as the 6–3 vote makes it sound, with three MPC members pushing for a rise to 4%. The next decision lands on 17 September, and most forecasters expect another hold.

If you're planning to buy or remortgage in the next few months, all of this matters less for the headline rate than you might think, and more for something most people never think about until they're mid-application: how much a lender will actually let you borrow. So this week I want to open up that black box.

It's Not Just a Multiple of Your Salary

Everyone's heard the rule of thumb: lenders will offer around four to four-and-a-half times your income. It's a useful starting point, but it isn't how the maths actually works. Every mainstream lender now runs a full affordability assessment that looks at what's left over each month after your real-life costs, not just what you earn.

That means two people on identical £45,000 salaries can walk away with very different offers, depending on whether one has a car allowance, childcare costs, a student loan, or three credit cards ticking along in the background.

What Actually Goes Into the Calculation

Lenders build their figure from four main ingredients:

1. Gross income — salary, bonuses (often only partially counted), overtime, and any additional income such as rental or freelance earnings.
2. Committed outgoings — existing loans, credit cards, car finance, child maintenance, and student loan repayments.
3. Everyday living costs — council tax, childcare, and increasingly granular estimates of household spending based on your family size.
4. Credit history — not just whether you've missed payments, but how you actually use credit day to day.

The Stress Test — and Why It Bites Harder When Rates Are Higher

On top of all that, lenders test whether you could still afford the mortgage if rates rose further, typically a few percentage points above the deal you're applying for. With fixed rates already sitting close to 5%, that stress rate can push towards 8% or higher. This, far more often than poor credit, is the reason well-qualified buyers get offered less than they expected this year.

Five Things That Can Genuinely Move Your Number

1. Clear small debts before you apply — even a modest £3,000 car loan can strip tens of thousands off your borrowing.
2. Rein in subscriptions and buy-now-pay-later a few months out — lenders typically review three to six months of bank statements.
3. Close unused credit cards — available credit counts against you even sitting at a zero balance.
4. Consider a longer term — stretching to 30 or 35 years lowers the monthly cost and can raise what you qualify for, though it's worth weighing against the extra interest over the term.
5. Model a joint application both ways — combining incomes helps, but combined liabilities come with it, so it's worth running the numbers both ways before deciding.

My Take

With three MPC members openly pushing for a rate rise and fixed deals nudging up again this week, I don't think this affordability squeeze is going anywhere for the rest of the year. If you're planning to buy or remortgage before Christmas, get your outgoings tidied up now, not the week before you apply. It's genuinely the one part of the process you have real control over.

Get in touch before you start house-hunting or filling out an application. A ten-minute conversation about what you'd actually be offered can save you a wasted afternoon and a disappointing survey later.

Kindest regards

Ian

Ian A Moore CeMAP — Director, IM Mortgage Consultancy Limited

Your home may be repossessed if you do not keep up repayments on your mortgage. IM Mortgage Consultancy Limited is authorised and regulated by the Financial Conduct Authority. This article is for general information only and does not constitute mortgage advice; rates and figures quoted were accurate at the time of writing and are subject to change.