When you’re moving home, one of the first things you'll likely consider is how much of a mortgage you can borrow. While lenders traditionally let you borrow up to about 4 - 4.5 times your salary, mortgages based on 5 times your salary are available to applicants who meet certain criteria. A higher income multiple does mean a larger mortgage and bigger monthly repayments. This guide will explore getting a mortgage based on 5 times salary or income, how to apply, which lenders offer them and their criteria.

Can You Borrow 5 Times Your Salary from a Mortgage Lender?

Getting a mortgage 5 times your salary (if you’re employed) or income can be challenging and whether it’s an option for you will depend primarily on your income and deposit, as most lenders have stricter income and mortgage affordability requirements for these kinds of mortgages. This means that a large mortgage at a higher income multiple may not be affordable for many borrowers.

To qualify for a high income multiple mortgage such as one at 5 times your income, lenders will often require some or all of the below:

  • A high income – e.g. £50,000 - £75,000 per year. This is the main requirement for a mortgage at 5x your income. If it’s a joint mortgage the lender may require that one individual meets the income threshold to qualify for the higher income multiple or the total joint income of all applicants exceeds a higher threshold such as £100,000
  • A deposit of 20% - 25% - this is because lenders can often offer higher income multiples for maximum borrowing on mortgages with LTVs of 75% - 80% or below
  • A good credit profile – any adverse credit blips or events can limit your mortgage options and make it harder to access products at higher income multiples
  • A good debt-to-income ratio - some lenders may have concerns about your ability to manage payments if you have a high debt-to-income ratio

Even if you meet all these requirements, getting a mortgage 5 times your salary isn’t guaranteed. It ultimately depends on your situation. A whole of market mortgage broker like John Charcol will be able to advise you on your options and find you the lender with the best deal for your situation.

How to Work Out How Much You Can Borrow

To determine how much mortgage you can afford to borrow, use a mortgage affordability calculator, which will take into account your income, outgoings and deposit.

You can also:

  • Determine your gross income - the total amount of money you earn before taxes and other deductions
  • Calculate your net income - your income minus taxes, national insurance, and any other deductions
  • Determine your outgoings - include all of your regular expenses, such as rent or mortgage payments, utility bills, credit card payments, and other debts
  • Calculate your debt-to-income ratio - the ratio of your total monthly debt payments to your gross monthly income
  • Use a repayment calculator - calculate your repayment amount so you can see how much you'll be paying per month
  • Consider all the costs of moving - calculate the costs of buying a house and getting a mortgage, such as conveyancing fees, mortgage arrangement fees, and Stamp Duty Tax
  • Get advice from John Charcol - a mortgage broker will help you understand the mortgage process, be able to find you lenders that can consider 5x income mortgages, prepare your application and more

It's important to remember that the amount you can afford to borrow is not the same as the amount you should borrow. An income multiple like 5x your income is only the maximum you could potentially borrow based on your annual earnings. Lenders will consider other factors like your monthly outgoings and overall circumstances to determine what they will actually lend to you.

Can a First Time Buyer Get a Mortgage for 5 Times Salary?

If a first-time buyer meets the lender’s criteria then there is no reason they wouldn’t be able to get a mortgage borrowing at 5 times salary or income. Of course, they would need to meet the income threshold, have enough in deposit, have a good credit profile and more in order to be eligible.

The only reason it may be less likely for a first-time buyer to get a mortgage for 5x salary or income is that they may be earlier on in their careers and therefore struggle to meet the criteria and save a larger deposit.

Which Lenders Offer 5 Times Salary Mortgages?

Several lenders allow mortgages borrowing 5 times salary. These lenders include major high street banks such as Barclays, HSBC, TSB and Santander and building societies such as Coventry and Skipton. Consulting with a mortgage broker like John Charcol will help you find the right lender and mortgage deal for your needs. Our specialist mortgage advisers have access to the whole mortgage market, including building societies and specialist lenders.

Are the Rates for a Mortgage Based on 5 Times Salary More Expensive?

Interest rates on mortgages at 5 times salary don’t tend to be any more expensive than the interest rates on mortgages using standard income multiplies such as 4 – 4.5. However, the larger your deposit and the better your credit history, typically the better the rates available to you.

Can You Get a Mortgage 5 Times Salary Based on Joint Incomes?

Yes, lenders will typically consider joint incomes when determining the amount you can borrow for a mortgage. This means you can borrow up to 5 times your combined salary when applying for a mortgage with a partner or spouse. This can make it easier for couples or partners to afford a larger mortgage.

Bear in mind that for joint mortgages, lenders may require that one of the applicants meets the minimum income threshold (e.g. £50,000 - £75,000) to qualify for the higher income multiple. Or they may have a higher income threshold for joint/household incomes such as £100,000.

Lenders will consider both applicants on a joint mortgage, looking at their income, credit history, age and more.

How Much Deposit Do I Need for a 5 Times Salary Mortgage?

The amount of deposit required for a 5 times salary mortgage depends on the specific lender, the type of mortgage, and the property's value. Typically, the larger the deposit, the better the mortgage terms, such as lower interest rates and better loan-to-value ratios.

A general rule of thumb is that a deposit of at least 15% - 25% of the property value is required to secure a 5 times salary mortgage. This is compared to the typical minimum deposit requirement of 5% - 10% for residential properties.

How to Borrow 5 Times Annual Salary

Getting a mortgage 5 times your salary in the UK can be challenging, as most lenders have strict income and affordability requirements. However, there are a few things you can do to increase your chances of being approved.

Improve Your Credit Score and Credit History

Your credit history is one of lenders' most important factors when assessing your mortgage application. A higher credit score can give you access to more lenders and more deals, improving your chances of being approved, while a lower credit score may make it more difficult. To improve your credit score, pay your bills on time, reduce your outstanding debt, and don’t continuously max out all of your credit.

Prove a Stable Income

Lenders will want to see that you have a stable income. They will also want proof of your income, such as pay stubs or tax returns, to determine your ability to repay the loan. To prove your stable income, you should provide detailed information about your employment or self-employment, such as your job title, income, bonuses and length of time in your current position.

Reduce Your Debt-to-Income Ratio

Some lenders also consider your debt-to-income ratio, which is the amount of debt you have compared to your income. A high debt-to-income ratio may make getting approved for a mortgage more difficult, as it could indicate that you are overextending yourself financially. To reduce your debt-to-income ratio, you should try to pay off as much outstanding debt as possible before applying for a mortgage orremortgage.

Make A Large Down Payment

The larger the down payment in the form of a deposit, the lower the LTV (loan-to-value) and the less risky the loan is for the lender. A Lower LTV can also give you access to more deals and better interest rates.

Provide Additional Documentation

Some lenders may require additional documentation, such as proof of savings, assets, or other income sources.

Show a Stable Address History

Lenders look for stability in the borrower's life and having a stable address history for the last 3 - 5 years can increase your chances of approval.

Seek Advice from a Mortgage Broker

A mortgage broker such as John Charcol can help you understand your options and find you the best deal for your specific situation. We make sure you don’t waste your time looking at the wrong lenders and products and instead shop around for you, ultimately directing you towards the right deal that comes with criteria that aligns with your situation.

Can You Get a 5 Times Salary Mortgage with Bad Credit?

Whether you can get a mortgage at 5 times your income with bad credit will depend on the nature of the bad credit and how recent it was. If it’s something small, like a late utilities bill from 3 years ago, then you should still have access to a range of mortgage options. If it’s more serious, like a missed mortgage payment within the last year, then it’ll be much harder to find a lender willing to offer you a mortgage at a higher income multiple, or a competitive deal.

Can You Get a Mortgage Based on More than 5 Times My Salary?

Getting a mortgage over 5 times your salary in the UK is possible, but whether it’s an option for you will ultimately depend on your situation.

If you have an income of £50,000 - £75,000 and have a deposit of 20% - 25% or more, then you’ll stand a good chance of finding a lender that will consider your application for a mortgage at 5x your salary. Of course, there will be other criteria you’ll have to meet and this will vary between lenders.

The good news is that your John Charcol mortgage adviser can help you! We’ll learn about your situation and your requirements, explain your options and find you the best deal for your circumstances.

Get in touch with us on 0330 433 2927 to learn more.

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