Scenarios
How Much House Can You Afford?
See how first-time buyers, self-employed, buy-to-let investors, and rate-locked buyers calculate affordability differently. Each situation has unique considerations.
~8 min read
Last updated August 2026
Scenario 1: First-Time Buyer in London
The Situation: Sarah, 28, earns £50k/year as a software developer. She's saved £40k for a deposit. She wants to buy in London.
Sarah's Numbers
Salary: £50,000/year
Deposit saved: £40,000
Target area: South London, £350k property price
Interest rate: 4.5% (current fixed rate)
Mortgage term: 25 years
What she can afford:
| Property Price |
Deposit % |
Loan Amount |
Monthly Payment |
LTI Ratio |
| £300k |
13% |
£260k |
£1,379 |
5.2× |
| £350k |
11% |
£310k |
£1,645 |
6.2× |
Reality Check: Sarah's LTI at £350k is 6.2×, which exceeds most lenders' 4.5× maximum. Even though the payment (£1,645) might feel affordable, she likely won't be approved. She needs either: (a) save a bigger deposit, (b) wait for her salary to increase, or (c) buy a cheaper property.
What Sarah Should Do:
✓ Test £280–300k properties (where LTI stays under 4.5×)
✓ Consider saving another £10k deposit to reduce LTV and monthly payment
✓ Ask her employer about salary increases or bonuses that might be counted
✓ Lock in a 5-year fixed rate now (4.5%) to protect against future rate rises
Scenario 2: Self-Employed Buyer
The Situation: James, 35, runs a freelance consulting business. His income varies. Last 2 years averaged £45k, but this year is trending toward £60k.
James's Numbers
Self-employed income (2-year average): £45,000
This year projected: £60,000 (but not yet proved)
Deposit saved: £50,000
Target property: £280k
Interest rate: 4.75% (self-employed rate)
The Challenge: Lenders use conservative assumptions for self-employed income. Most require 2–3 years' accounts. They typically use the lower of: (a) 2-year average, or (b) most recent year's net profit.
| Lender Assumption |
Effective Income |
Max Loan (4.5×) |
Affordable Price @ £50k deposit |
| Conservative (2-yr avg) |
£45,000 |
£202,500 |
~£252k |
| Optimistic (this year) |
£60,000 |
£270,000 |
~£320k |
What James Should Do: Get in touch with a mortgage broker who specialises in self-employed lending. Some lenders are more flexible and will consider: (a) proof of growing income trend, (b) forward contracts or quotes for upcoming work, (c) accounts filed with HMRC. Testing the calculator at £250k is realistic; £280k is the stretch.
Scenario 3: Buy-to-Let Investor
The Situation: Emma, 40, wants to buy a property to rent out. She earns £60k as an employee, has £80k deposit, and found a property that rents for £1,500/month.
Emma's Numbers
Salary (main income): £60,000
Deposit saved: £80,000
Property price: £350k
Expected rental income: £1,500/month (£18k/year)
Interest rate (BTL): 5.5% (typically higher than owner-occupied)
The Difference: Buy-to-let lending is stricter. Lenders test: (a) Does rental income cover at least 145% of the mortgage payment? (b) What's your income from other sources? (c) Can you still afford it if rates rise?
| Metric |
Owner-Occupied |
Buy-to-Let |
| Monthly Payment (25 years @ 4.5%) |
£1,644 |
£1,927 |
| Rental Income Coverage Required |
N/A |
£1,927 × 1.45 = £2,795 |
| Actual Rental Income |
N/A |
£1,500 (not enough) |
The Problem: Emma's property doesn't pass the rental income test. Rental income (£1,500) only covers 78% of the mortgage. Lenders require 125–145% coverage. Emma needs to either: (a) find a cheaper property, (b) increase her deposit further, (c) source a property with higher rent, or (d) rely on her personal income to bridge the gap.
Scenario 4: Rate-Locked Buyer Weighing Options
The Situation: Michael, 32, is ready to buy. He's found a property, but rates have moved. He's deciding: lock in a 2-year fixed at 4.5%, or bet on rates falling and choose a 5-year fixed at 5.2%?
Michael's Affordability Test
Property price: £320k
Deposit: 15% (£48k)
Loan amount: £272k
Term: 25 years
| Option |
Rate |
Term |
Monthly Payment |
Total Interest |
| 2-year fixed |
4.5% |
25 years |
£1,448 |
£162,500 |
| 5-year fixed |
5.2% |
25 years |
£1,584 |
£184,300 |
| Difference |
0.7% |
— |
+£136/month |
+£21,800 |
Michael's Decision: The 2-year fixed is £136/month cheaper now. But it expires in 2 years. If rates fall below 4.5% by then, he's safe and can refinance to better rates. If rates rise to 6%+, his renewal rate could be much higher. Michael's best choice depends on: (a) his risk tolerance, (b) whether he expects rates to fall, and (c) whether his income will likely increase by year 2 (improving his borrowing power).
Test Your Own Scenario
Use the calculator to model your own situation. Adjust salary, deposit, property price, and interest rate to find your realistic budget.
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