You put your details into a mortgage calculator a couple of years ago and didn’t like the answer. Try again today and the number may well have gone up. Your salary hasn’t moved much and neither has the house, but the maths the lender uses has changed.
That sounds like good news, and for some people it is. But a bank agreeing to lend you more is a different thing from you being able to afford more. If you’re in your late forties or fifties, the difference matters more than it does for a 30-year-old.
What actually changed in mortgage affordability rules?
Since 2014, Financial Conduct Authority rules have required lenders to check that you could still pay if interest rates went up. That’s the stress test, and it applies to any deal where the rate is fixed for less than five years. Until 2022 the Bank of England’s Financial Policy Committee also expected lenders to test borrowers at 3 percentage points above the lender’s standard variable rate. That expectation was dropped in 2022, but many lenders kept testing at a punishing rate anyway, usually by adding a margin to their own reversion rate.
On 7 March 2025 the FCA reminded lenders that its rule doesn’t say which rate they have to use. They can design a test that suits the mortgage in front of them, including taking into account whether they’re likely to offer you a new deal when the fixed rate ends. In plain English, they can stop assuming the worst.
Lenders responded quickly. According to the FCA, about 85% of the market has since changed its approach, and lenders can now offer roughly £30,000 more on a typical application. The regulator has said it isn’t planning to change the stress test further, though its wider review of mortgage rules is still going on.
How much can I borrow on my salary?
The loan-to-income multiple is still the quickest guide. Most mainstream lending sits at around four to four and a half times income. The Bank of England also limits how many new mortgages each lender can write at 4.5 times income or more, to 15% of its lending. The FPC has since given individual lenders more room within that limit, but lending at those multiples is still restricted. That’s why the bigger multiples you see advertised usually come with conditions, such as a higher income, a bigger deposit or a particular profession.
The multiple only sets the ceiling. Below it, the lender looks at your actual outgoings: childcare, car finance, credit cards, school fees, maintenance payments, and what’s left once the stressed mortgage payment comes out. Two people on the same salary can be offered very different amounts.
A worked example: if a couple earn £80,000 between them, 4.5 times income is £360,000. At 4.5% over 25 years, that’s about £2,000 a month. Stretch to 5.5 times and you’re borrowing £440,000 at roughly £2,450 a month. That’s an extra £450 a month for the next quarter of a century, and nothing about the couple has changed except the size of the loan.
Why borrowing more doesn’t make you any richer
Look at the extra £30,000 on its own. Over 25 years at 4.5%, it costs about £167 a month, and you pay around £20,000 in interest on top of the £30,000. Over 15 years, which is a more realistic term if you’re 52, it’s about £229 a month and roughly £11,000 in interest.
There’s a bigger catch, too. When every buyer in the market can borrow £30,000 more, sellers know about it. Easier credit tends to end up in asking prices. If the house you wanted simply costs more because everyone’s budget has gone up, you haven’t gained anything. You’ve just got a bigger debt on the same house.
A bigger mortgage offer tells you what the bank is comfortable with. It tells you nothing about what you’re comfortable with.
The stress test was never meant to work out a comfortable budget. It answers a narrow question: could you just about keep up the payments if rates rose? Comfortable means something else: still paying into your pension, keeping an emergency fund, and surviving a pay freeze or a redundancy without selling the house.
Does my age affect how much a lender will let me borrow?
Yes, and at this stage of life it often matters more than the stress test. Most lenders want to know how the loan will be repaid if the term runs past your expected retirement age. Usually that means showing pension income that can support the payments, which will be well below your salary. Many lenders also have a maximum age at the end of the term.
A shorter term makes each month more expensive. Borrowing £250,000 at 4.5% costs about £1,390 a month over 25 years but around £1,910 over 15 years. If rates were 6.5% when you came to remortgage, the 15-year payment would rise to about £2,180. Payments like that can squeeze your pension contributions just when you should be paying in the most.
The FCA’s review has looked at later-life lending and how interest-only mortgages work, including switching between interest-only and repayment more easily. Until any new rules are published, take current lender criteria as they are, not as you hope they’ll be.
Before you take the bigger number
Work out your own figure first. Take your net monthly income and subtract your real spending and your pension contributions. Then see what monthly payment is left, and test it at a rate two or three points higher than today’s. That’s a tougher test than many lenders now use.
Remember the costs that sit outside the mortgage. A bigger loan usually means a pricier property, and that means more property tax. In England and Northern Ireland you pay stamp duty, and from 1 April 2025 the nil-rate band went back down to £125,000 for most buyers. Scotland has Land and Buildings Transaction Tax and Wales has Land Transaction Tax, each with its own bands, so check the rules for wherever you’re buying.
If you do borrow at the top of the range, an overpayment plan gives you a way out. Most fixed deals let you overpay up to a set percentage each year without a charge, so you can use the extra borrowing power to buy a little more time rather than a lot more house. MoneyHelper has free guides and calculators, and for a decision this big, a broker or FCA-regulated adviser can tell you which lenders’ criteria fit you.
In short
Since the FCA clarified its stress test rules in March 2025, most lenders have changed how they test affordability, and many borrowers can now get around £30,000 more. Loan-to-income limits and checks on your outgoings still apply, and so do age and retirement-income rules. Borrowing more doesn’t make you better off if prices rise to match it, so set your own limit before a lender sets one for you.
Sources
Midcent Money
Andrew Ingram writes about money for men 45 and over – the years when retirement starts to feel real and the decisions get bigger. Pensions and retirement planning, investing, savings, mortgages and tax: what changed, what it means for your plans and what's worth doing about it. No hype, nothing to sell, and a clear steer on when it pays to get personal advice.
One of Midcent's writers. Spotted something? Write to andrew@midcent.uk.
