Ok, so i done this online calculator thing and it said we could get a mortgage of £120,000 based on our incomes, deposit etc etc. We have £20,000 saved up for a deposit but what i don’t under stand is, if we took a mortgage out of £120,000 would the £20,000 deposit come off that so we have a mortgage of £100,000 …. OR …. Does it mean we have an extra £20,000 to play with for example buy a house for £140,000 take our deposit off and we’re left with the original £120,000 mortgage?
I’m just so confused on how your deposit affects how much you can borrow etc :S
We could have a deposit of £50,000 but still only be able to borrow £120,000 so i really don’t get it
Thanks for any help and try not to make it to complicated 
When referring you mortgages and how much you can afford to pay for a property the word "deposit" is confusing. Mortgage lenders will decide how much they will lend using two basic criteria.
First they will set a maximum they will lend to you, based on how much they think you can afford to repay. This used to be done on a simple multiplier of your salary – eg they would lend 3x your income. These days they use much more sophisticated calculations based on your income, outgoings and credit status, but for most people the number is likely to be about the same. EG about 3x your gross income. This figure is absolute – if they think you can only afford a £120,000 mortgage then you will not be able to borrow more than £120,000.
The second criteria is the property itself. Lenders will not lend the full amount you are paying, no matter how little this is compared to the "value" of the property or how little it is compared to what they might lend based on your affordability score. These days lenders are unlikely to lend more than about 75% or 80% of the purchase price. This means that you have to find the remaining 25% or 20% from your own funds, and this amount is what is, confusuingly, called your "deposit".
So if you have £20,000 then that could be, say, 20% of the price. Meaning the lender would expect to lend the other 80% or £80,000, giving a maximum purchase price of £100,000. If you found a lender willing to lend 90% of the price then your £20,000 would be 10% meaning the maximum purchase price would be £200,000 with a £180,000 mortgage – subject to you being judged able to afford a mortgage of this amount.
I would be very careful about using a simple calculator that combines both these criteria into one, because you don’t know whether the maximum figure is based on your earnings or your savings. Speak to an independent mortgage advisor (every estate agent has one who will talk to you for free) and ask him what you will be able to borrow.
If you want to buy a house for £120.000. you would need a deposit of 20k and a mortgage for 100k.
UK
Hi. The mortgage calculator has produced a figure that your incomes should support the repayments,it will assume you are placing a deposit in this case £20k so with the loan and your deposit you can look at property in the £140 k range.
As said the mortgage is what you seemingly can afford on your incomes a larger deposit rarely influences a larger loan so with a deposit of £50k you can shop in the £170k range.The larger deposit may however get you a better deal as the risk to the lender is less.
Please bear in mind these calculators are as a guide only and each lender will have its own lending criteria.You will have to approach a potential lender in due course to establish clearly what they are prepared to offer in principle,shop around to get the best terms.
You have a total of £140,000 at your disposal, HOWEVER, don’t go that high because you will need some of your funds to pay for a survey (don’t go for just a valuation), mortgage application fee, solicitors fees and the first mortgage payment which is often due before the 1st month is up. Allow around £3 – £5k for that lot.
Mortgage interest rates are at a record low, so what is affordable now may not be affordable if the rates rise in he future (as they surely will). This is another reason to not go too high with the mortgage to try and keep a grip on affordability.
The deposit goes towards to purchase of the house. You put x amount down and use a mortgage for the remainder.
You say your mortgage qualifications max out a $120- that’s the max you can borrow. Your down payment won’t change the amount you can borrow, as making a down payment doesn’t change the amount of money you make each month. Now, the max you can borrow does mean that maxes out the amount of house you can buy. With a $50k deposit, you’d be able to go up to $170, although the mortgage payments you’d be left with would be the at the highest level you could afford. If you were to find a $120k house you liked, and put $50k down, then your payments would be very manageable as you’d only need to borrow $70k.
Don’t rely solely on the calculator, it’s just a rough guide, it doesn’t know your credit rating etc.