How Much Should My First Mortgage Cost?

For a growing, ever-older group of people, taking the first step onto the property ladder will be their biggest financial commitment. It's likely that the price of a first property will be the most they've ever spent on a single purchase up to that point. Understandably then, it's an experience fraught with wracked nerves and frustration.

And the process is more uphill than ever before, with the recent recession making cheap, easy and available mortgages a thing of the past. This should be viewed as a positive limitation; there was never a good time to borrow more than you could afford, it just seemed that way for a while. Now, you are forced to look at the market realistically and not go in above your head. Mortgage calculators and other tools are readily available online – try the Santander website to give the mortgage calculator from Santander a go.

A mortgage calculator will help you establish how much you can spend, based on your annual income and the area you wish to live in. In the past, it was common for mortgage lenders to offer around twice the income of a household, or three-and-a-half times the primary earner's income. In the years leading up to the property boomof '06, lenders adjusted their affordability indexes to include more potential buyers, many of them people who had thought house ownership out of reach in the previous century. Of course, borrowing criteria is considerably more stringent these days. A good credit history is always required, and a larger deposit may be necessary.

Even if you think you can squeeze that dream house out of a lender, you would be wise to keep yourself in check. Think about your current earnings and consider the possibility of pay reductions and even redundancy, rather than just assuming that your earning power will go up. Remember, interest rates can and will go up at a moments notice, so don't spread your finances to thinly. Even with a fixed-rate mortgage, the security is not infinite. At the end of the fixed term, the rates may well be higher than what you've been used to. Keep abreast of current interest rates in the financial sections of newspapers to get a feel for the fluctuations of the money markets.

Approach the purchase of a house with the modesty befitting such a huge commitment. If you end up earning more money and security, you can always upgrade to a bigger, more expensive home – it's called property ‘ladder' for a reason.

Be vigilant for small-time lenders offering big-time deals. If the past few years has taught us anything, it's that no financial institution is 100% secure. But it remains true that bigger is safer then smaller. Try reputable firms like Santander, and run your numbers through a mortgage calculator to see if your dreams are in step with reality.