Got a Mortgage Offer: The Monthly Commitment Number Most People Miss

You opened the letter. You saw the monthly figure. You are about to close the envelope and pretend you have not seen it yet.

That is the moment. Not when you viewed the house, not when you made the offer, not even when the survey came back clean. The moment the mortgage becomes real is when the lender tells you exactly what it costs every month for the next 25 years.

If you are reading this on the kitchen floor with the letter in your hand, here is the single calculation that tells you whether the offer is the right one or whether the bank has approved more than your life can carry.

The Bank Calculated Your Maximum, Not Your Right Number

Lenders decide how much to offer you by stress-testing your income and outgoings against a rate they pick. They also assume a multiple of your salary, typically 4 to 4.5 times for a single applicant, or 3 to 3.5 times combined for joint applicants.

They do not know about the season ticket for the child, the car that is due for replacement, the two holidays a year your family actually takes, the parents you help at Christmas, or the friend who is getting married in Tuscany in October. They are working from a model of your life, not your life.

So when the bank says yes to a £260,000 mortgage, the bank is telling you the maximum you could borrow. It is not telling you the right number.

The Single Calculation: Work Backwards From What You Actually Have

Take the monthly figure on the offer letter. Add council tax, buildings insurance, contents insurance, and a 1% per year maintenance allowance for the property value. That is your real monthly housing cost.

Then look at your take-home pay after pension contributions. Subtract the real housing cost. Subtract the rest of your actual spending, the food, the fuel, the child care, the gym, the subscriptions, the holidays. The number left is your surplus.

If your surplus is under £400 a month after all of that, something will eventually give. A boiler, a redundancy, a child who needs braces, a wedding to fund. The mortgage will still be there. Your surplus will not.

What the Stress Test Actually Tells You

The lender has already stress-tested your ability to pay at a higher rate. They will not lend to you unless you could afford the mortgage at around 7% or 8%, or the offer rate plus 3%, whichever is higher. The FCA made that rule after 2014, and it has kept the system in better shape than the pre-2008 era.

That is reassuring, but it does not tell you the right question. The right question is not "can I afford the mortgage at 7%" but "can I afford the mortgage at 7% while also still saving for retirement, paying into a pension, and keeping an emergency fund of three to six months of essential spending?"

Most first-time buyers who pass the lender's stress test still cannot afford the mortgage on those terms. The lender is checking the offer, not your wider financial life.

The Three Things to Check on the Offer Letter Before You Sign

First, the rate type. Most first-time buyers default to the lender's standard variable rate when their deal ends. The SVR is the highest rate the lender charges. Ask specifically whether the offer is a fixed rate, a tracker, a discount, or the SVR. If it is not a fix, your monthly payment can move with the Bank of England base rate, and the base rate has moved before.

Second, the overpayment allowance. Most fixed-rate mortgages allow you to overpay up to 10% of the outstanding balance per year without an early repayment charge. That is flexibility. If your lender does not allow overpayments, the offer is worse than the equivalent one that does.

Third, the fees. Arrangement fees, valuation fees, legal fees, and any cashback are all on the illustration. Compare them against the rate, not in isolation. A 0.1% lower rate with a £1,500 fee is not always cheaper than a higher rate with no fee.

If the Number on the Letter Feels Wrong, Say So

You can ask the lender for a smaller loan. The bank's offer is not a take-it-or-leave-it figure. You can ask for 80% of what they offered. You can ask for a longer term to reduce the monthly payment. You can ask for an interest-only period while you build up savings.

You can also walk away. The offer letter is not a contract until you have exchanged contracts on the property. Until then, you can change your mind without losing the offer, and the lender will usually let you re-apply at a different size if your circumstances have not changed.

The mortgage is the biggest financial commitment most people make. It deserves more than a single read of the letter on the kitchen table.

The One Thing to Do This Month

Before 31 August 2026, sit down with the offer letter and a blank sheet of paper. Write down the monthly figure at today's rate, the monthly figure at the lender's stress test rate, and the monthly figure at the lender's SVR. Then write down your take-home pay and your actual monthly spending.

If the difference between today's payment and the stress test payment is more than 10% of your take-home pay, the offer is too big. Either ask the lender for a smaller loan or extend the term before you sign.

If the difference is less than 10%, the offer is workable, but you still need to know where the surplus is going every month. A pension contribution, an overpayment allowance, and a three-month emergency fund are the three destinations.