How can I organise a mortgage equal to my rent?

Q I pay ?780 a month in rent but, as my salary is ?30,000, the mortgages on offer to me are not enough to allow me to buy a property for around ?150,000 (the price of a one-bedroom flat locally).

I already have a ?40,000 mortgage on a flat in Birmingham, which I bought for ?60,000. I lived there until five months ago and don't want to sell it, even though that would give me a bigger deposit (I only have about ?7,000).

How come I can't prove that I pay a certain amount of rent regularly and therefore can pay a mortgage of a similar amount?

CH

A The simple answer is that it isn't that straightforward a comparison.

Although it may seem logical to assume that if you can afford to pay almost ?800 a month in rent you could afford to pay a similar amount in mortgage repayment, rents are not generally at the mercy of interest rates - unlike mortgage rates. When arranging a mortgage, you need to take future affordability into account, because mortgage rates can rise dramatically - ask anyone who had a mortgage in the late 1980s. You're less likely to see such a dramatic rise in rent levels.

Despite sensational media coverage of lenders routinely offering up to 10 times a borrower's income in the current housing market boom, most mortgage lenders - sensibly - continue to base their lending criteria on affordability. And that means they will lend you only what they think you can afford to repay. An annual salary of ?30,000 pays around ?1,800 net a month, and if you're paying ?780 in rent plus a mortgage repayment on your flat in Birmingham that eats up a sizeable chunk of your disposable income - and that's assuming you don't have any further debts.

You don't say whether your flat is let. If it is, this would reduce your outgoings - because the mortgage would be covered by your tenants - and possibly also boost your income, if the rent is more than the mortgage repayment.

Otherwise, you're looking for a mortgage of ?143,000 (?150,000 less your deposit), so you would need a lender to advance around five times your income. Some lenders - including NatWest - do lend on this basis, but only to borrowers whose income is likely to rise rapidly during their careers, such as graduates in medicine, accountancy and law.