New research has prompted a warning for customers of major UK banks and building societies, after mortgage calculators showed an £80,000 gap in how much they say a buyer can borrow. Brokers have described the tools as just a “rough guide” for borrowers.
New Newspage research, sponsored by onlinemortgageadvisor.co.uk, found the same buyer could be told they can borrow anything from £160,000 to £240,000. The study tested seven mortgage calculators on October 6 using a single 30-year-old first-time buyer earning £40,000, with a £10,000 deposit (5%) on a £200,000 home, needing to borrow £190,000. Some calculators said the home was affordable for the applicant, while others said it was not.
£80,000 gap between lenders
The same first-time buyer is told anything from £160,000 to £240,000. Barclays says the buyer can borrow £160,000, while Nationwide’s Helping Hand gives £240,000: an £80,000 gap. MoneyHelper gives up to £200,000 while TSB, Lloyds, Halifax and HSBC all give £179,600.
Brokers said the £80,000 gap did not mean any of the calculators were necessarily wrong, but reflected the different affordability models, income multiples and risk appetites used by individual lenders. They warned that calculators provided only a “rough guide” and might not account properly for factors such as bonuses, overtime, self-employed earnings, second-job income, existing debts or past credit problems.
Brokers urge caution
Pete Mugleston, mortgage advisor and managing director of Derby-based onlinemortgageadvisor.co.uk, urged caution over using mortgage calculators. He added: "No standalone calculator can offer 100% certainty. The reality is that 100+ lenders vary wildly across generosity, acceptable income types, age, credit history and property criteria.
Navigating this is tough even for advisers – we regularly help clients who were previously quoted a fraction of what they could actually borrow – so for consumers going solo, it's a minefield. While multiplying income by 4x up to 7x gives a rough starting point, standard calculators quickly fall over for anyone with variable income, credit blips, or existing debts."
Craig Fish, director of London-based Lodestone Mortgages, said lenders were not “wrong” – they just had different criteria. He added: "An £80,000 gap for the same buyer on the same salary tells you all you need to know about online calculators. Every lender runs its own affordability model, with its own view on income multiples, outgoings and stress testing. Nationwide's Helping Hand is built to stretch for first-time buyers, reaching six times income here, while Barclays stops at four."
Lenders assess differently
Matt Coulson, founder of Rickmansworth-based Heron Financial, said lenders assessed borrowers differently. He added: "That £80,000 gap looks alarming, but it's not a malfunction. Each calculator is giving you that lender's honest answer, and lenders genuinely assess the same person very differently. The spread usually comes down to income multiples and the specific product."
Tracey Dixon, buy-to-let mortgage specialist and owner of Cardiff-based Pure Mortgage and Protection, said calculators were “useful starting points”. She added: "A mortgage calculator can give you a number. It cannot give you the whole lending decision. I have seen this with my own clients: the same circumstances can produce very different borrowing figures across lenders. That can mean the difference between buying a home and believing it is out of reach."
Michelle Lawson, director of Fareham-based Lawson Financial, said borrowers should speak to a broker for advice. She added: "This demonstrates the need for advice as some borrowers will run some numbers and think that their position isn’t proceedable. There are many lenders who all have different lending policy and differing ways they take the various income streams into account. The borrowing capacity can range significantly, but brokers have the experience, knowledge and additional system access to drill this down accurately. Even some of these that we use in the industry are for guidance only. Brokers can often make what seems impossible possible."
