Salary is one of the most important factors to calculate the amount, but also job stability, savings and if the loan will have more than one holder
One of the main questions that arise when looking for a house is what mortgage I can afford with my salary. As is logical, the house that you can afford will depend on the mortgage that the bank grants you and, in turn, this will depend (to a large extent) on your salary. If you want to have a clear idea of what type of mortgage you can afford taking into account your income, keep reading and we will give you all the keys.
How much money should we allocate to pay the mortgage?
When assessing what mortgage I can afford, the first thing you should take into account is your own salary. That is, what part of your salary you can allocate to paying a mortgage when the bank grants it to you. As a general rule, it is usually established that the maximum recommended mortgage debt should not exceed 40% of income.
In other words, if you have a salary of 1,000 euros, the maximum mortgage payment that you could afford should not be more than 400 euros per month. If you have a salary of 1,500 euros, the maximum quota will be 600 euros, and so on.
This is a very important factor when requesting a mortgage because the banks will take it into account when granting it or not. This means that if you want to buy a house for which you will need a mortgage that represents more than 40% of your income, it is likely that the bank will reject the mortgage application. However, if the mortgage you request is going to account for less than that 40% of your income, you will have a much higher chance that the bank will give the go-ahead when you go to apply for the mortgage.
How do I know if I can afford a mortgage?
In general, the main element that has to be taken into account when knowing what mortgage I can afford is my salary. That is, the level of income will determine if we can access more or less financing. However, although salary is a key factor to take into account when requesting a mortgage, it is not the only one. Therefore, it is important to take into account other factors that are also important when it comes to knowing what mortgage you can face as a client.
Some of these other factors that you should take into account are the following:
Employment stability
Although salary is important, job stability is also important when it comes to granting a mortgage. The payment of a mortgage is made over many years, so it is useless to have a good salary if it is not going to be maintained over time. In this sense, having a fixed contract instead of requesting a mortgage with a temporary contract makes it easier for banks to grant the loan, as well as having worked for the same company for many years or, at least, staying active in the workforce.
Previous savings
Another of the key factors when it comes to knowing what mortgage I can afford with my salary is the previous savings that are available when requesting the mortgage. The more savings you have, the less capital you will need to buy the house and, consequently, the mortgage that we have to request from the bank will be less. In this way, having previous savings will allow us to apply for smaller mortgages, which means a shorter repayment period or smaller instalments. In both cases, this will play in our favour when it comes to having access to the mortgage that best suits our preferences.
Number of mortgage holders
The importance of salary when it comes to knowing what mortgage I can afford is that it is the key element that determines the amount of money that we can allocate to pay off the debt (which should not exceed 40% of our income). However, if the number of mortgage holders is more than one, the risk is lower, since the income with which the payment is made does not depend on a single contract.
What house can you afford according to your salary?
The process of knowing what house you can afford according to your salary can be long and tedious to carry out. Luckily, idealista makes the process easy for you thanks to their home search tool that you can afford.
Its operation is very simple. You just have to enter a series of data that will help you know the level of financing you need and the level of financing to which you have access. Both results are then compared and, with just one click, you will have access to all the information related to the house that you can afford. Without a doubt, the easiest and most comfortable way to start looking for your new home.
Source: idealista.com
