If you're looking to apply for a mortgage, you may have already heard about mortgage income multiples. Most mortgage lenders use a multiple of your income to set a limit on the maximum size of the mortgage they could potentially lend to you. It's an important factor in the mortgage application process as it’s combined with your earnings to determine the maximum amount you could borrow. In this guide, we'll look at mortgage income multiples in more detail, how lenders use them to assess mortgage affordability and the other factors that affect how much you can borrow.


What Are Mortgage Income Multiples?

Mortgage income multiples are multiples of your annual income that mortgage lenders use to determine the maximum size of the mortgage loan you can afford. For instance, if you earn an annual salary of £40,000 and the lender uses a mortgage income multiple of 4.5, the maximum they will lend to you is £180,000.

This does not mean you’re guaranteed the £180,000 as it’s only your potential maximum borrowing. How much the lender will actually lend to you will depend on additional affordability factors, such as what you can make in monthly payments and the mortgage term.

Lenders are regulated but they have a certain amount of leeway regarding how they calculate affordability and determine mortgage offers. It’s not just based on an income multiple and your earnings. They consider the broader picture of your finances, including your credit history, outgoings, deposit, what you can afford in monthly payments and more to determine how much to lend to you.


What Are the Income Multiples for Mortgages?

Every lender sets their own income multiple and this can vary between applications. Nonetheless, the most common income multiples applied tend to be up to 4 to 4.5x your annual income. In some circumstances, for example if you work in medicine or law, you may even be able to borrow up to 5x your earnings. In exceptional circumstances, you may be able to get a mortgage for up to 6x your income. However, these are very rare and are usually only available to people with a high net worth.

The mortgage income multiples rules are similar for single and joint applicants. Lenders usually add both incomes for joint mortgage applications and multiply the joint figure as though it’s one income. This means you may be able to borrow substantially more on a joint application than a single one.


Which Mortgage Income Multiple Will I Get?

Lenders don't all use the same income multiple calculations, so it can be difficult to determine precisely how your affordability will be calculated without speaking to a specialist mortgage broker such as John Charcol. However, by using our mortgage borrowing calculator, you can get an idea of the size of the mortgage you may be eligible for. You need to provide your total household income and the calculator will tell you how much you can potentially borrow. You can also use a mortgage repayments calculator to determine how much your monthly payments may be.

Here are some typical mortgage calculations for different income multiples and income amounts. Ensure you check with your specialist mortgage adviser for figures relevant to your circumstances.

Income 3x Income 4x Income 5x Income
£20,000 £60,000 £80,000 £100,000
£30,000 £90,000 £120,000 £150,000
£40,000 £120,000 £160,000 £200,000
£50,000 £150,000 £200,000 £250,000
£60,000 £180,000 £240,000 £300,000
£70,000 £210,000 £280,000 £350,000
£80,000 £240,000 £320,000 £400,000

What Additional Income Do Mortgage Lenders Accept?

Lenders will consider multiple streams of income in their calculations. Commission, overtime and bonuses can all count towards your income. That's why you must provide a complete picture of your financial situation to enable the lender to assess the maximum mortgage you’re eligible for accurately. Some lenders will also accept income you receive outside of your employment, for instance, benefits such as tax credits or child benefits, investment and pension income and rental income from buy-to-let properties you own.


Can I Get a Mortgage for Over 5 Times My Income?

Getting a mortgage 5x your salary or income or more is possible, although only certain applicants may be eligible. The most common multiplier is between 4 and 4.5x your annual income. Still, certain circumstances could mean you’re able to borrow up to 5x your income or more. When you contact a specialist mortgage broker like John Charcol, we’re able to help you calculate your maximum borrowing potential. We look at your income, type of employment and job type, whether you have any additional earnings, your credit history, whether you’re making a single or joint mortgage application and more to give you a more accurate picture of what you could borrow. We also know which income multiples different lenders use and who to approach based on your circumstances and requirements. This means we can help you access a mortgage of over 5x your income if you meet the right lender criteria.

The same considerations apply for securing 6x your income as the 5x multiplier. However, a 6x mortgage income multiplier is even harder to get, and only certain borrowers can secure it, such as those with significantly high net worths or earning potential.


Can I Get a Mortgage of 7 Times My Salary?

It’s highly unlikely that you’ll be able to secure a mortgage of up to 7x your salary. There are some lenders private banks that may be able to consider above 6x your salary, but these products will come with strict criteria and caveats. Speak to a mortgage broker for more information on this.


What Will Affect the Income Multiplier I Can Get?

The lender will consider many different factors when assessing which income multiple to apply and how much you can borrow.

Deposit

The amount of deposit you put down relative to the value of the property you want to buy can affect how much you can borrow – a bigger deposit alleviates some of the risks for lenders. Lenders may offer borrowers a higher income multiple in return for a lower LTV (loan-to-value).

Income

Your income is key to mortgage income multiple calculations. Lenders typically offer higher income multiples to high earning applicants based on a single or combined income from a joint application. Some lenders have minimum income requirements and stricter criteria for larger loans. For instance, lenders offering 5x income multiple mortgages will typically require you to have an income of £50k to £60k. For standard borrowing, £20k to £25k is more typical.

Outgoings and Commitments

When assessing your affordability, the lender will consider your outgoings alongside your income and maximum borrowing. If your outgoings are high in relation to your incomings, the lender may decide to apply a lower income multiple and cap your maximum borrowing.

Type of Employment

If you're self-employed, certain lenders may apply a slightly lower income multiple than if you were employed. Nonetheless, overall being self-employed won’t make a big difference to what you can borrow as there are so many different factors to consider.

One main factor to consider with self-employment is that it may affect how the lender defines your income or what they require you provide as additional evidence of your earnings. Lenders usually ask self-employed mortgage applicants to provide a couple of years of self-assessment statements or accounts.

If you're a director of a limited company, your income is usually calculated based on the salary you take from the company and dividends. Trading as a limited company can make getting a mortgage more complex and require a specialist lender. Get in touch with a specialist mortgage broker at John Charcol, who can help you find the right lender and mortgage product for your circumstances.

Type of Property

The property type you’re after can have a bearing on your risk as a borrower. Properties of non-standard construction, such as steel and timber-framed homes, concrete prefabs and properties with thatched roofs, may result in you being limited to lower mortgage income multiples.

Mortgage Term

The mortgage term can sometimes affect the income multiple calculations. Stretching a mortgage over a longer term can reduce the monthly repayment amount assuming you don’t exceed the lender’s age limit, making them more affordable and potentially enabling you to borrow more. Most lenders assess your mortgage term in conjunction with your maximum borrowing and what you can afford on a monthly basis.

Credit Score

Lenders will want to see that you have a strong credit file. You’re less likely to be approved for a higher level of borrowing if you have a history of adverse credit. Most high street lenders are unlikely to offer their highest income multiple to prospective borrowers with poor credit, even if they have a good income. If you're concerned that your credit history may severely restrict your borrowing, there are specialist bad credit lenders that may be able to offer you a more suitable deal.


Are Mortgage Income Multiples the Same When You Remortgage?

Calculating your affordability for a remortgage works similarly to a standard mortgage. Lenders will apply an income multiple to your income to determine your maximum borrowing. They’ll also consider other factors such as what you can afford in monthly payments and your proposed mortgage term. This means that with a remortgage, you may be able to release equity from the property and borrow more than the amount outstanding on your existing mortgage, if your income allows.


Which Mortgage Lenders Offer the Highest Mortgage Income Multiples?

Income multiples can vary depending on the lender, as can all of their affordability criteria. As of November 2022:

  • Kensington Mortgages will consider mortgage income multiples of up to 6x but usually only for applicants in certain professions
  • Barclays offers mortgages for 5.5x your income if your LTV is under 85% and you earn over £75,000 or you're applying for a mortgage as a joint applicant with a combined household income of more than £100,000
  • Halifax considers loans based on 5.5x income multiples for mortgages under £750,000, an income of more than £75,000 and a minimum deposit of 25%
  • HSBC offers up to 4.5x the income of applicants earning at least £50,000 and a maximum LTV of 80%

Will Lenders Consider All of My Outgoings?

Mortgage lenders want a clear picture of your financial situation, but that doesn't mean they'll want to assess every last penny you spend. They’re primarily interested in your ongoing financial commitments that affect your ability to make your mortgage repayments each month. This typically includes any debt you have, such as personal loans, credit card debt and hire purchase agreements. Lenders may ignore certain items on your credit report, such as your mobile phone contract or debts that only have a few months left or will be cleared by the time you complete your property purchase.


What Income Multiple Can I Get with a Bad Credit History?

A bad credit history can mean lenders perceive you as a high risk borrower. This may limit the income multiple you can secure on a mortgage to a maximum of 4x your income or less. However, this depends on your credit score and the type of credit issues on your file.


How to Borrow More

If you want to borrow more than 4.5x your income, the most common mortgage income multiple, there are several things you can do to increase your chances of being approved for higher borrowing levels.

Put Down a Larger Deposit

The minimum mortgage deposit for buying a property is typically 5 - 10%. However, if you want to maximise the amount you can borrow, a larger deposit can work in your favour and present you as a lower risk borrower to lenders. A larger deposit will also increase the number of lenders available to you, giving you a better chance of securing the mortgage you want, borrowing more and accessing lower rates.

Include Additional Income

Some lenders are willing to include additional income in their affordability calculations on top of your basic salary or income from work. If you receive certain benefits, income from a second job, commission, overtime benefits, shift allowances or bonuses, you may be able to borrow more. However, those lenders who do accept supplementary income may only accept certain types and may only consider around 50 to 75% of this additional income in their calculations.

Consider Joint Borrower Sole Proprietor

If you’re struggling to afford to buy the home you want, a joint borrower sole proprietor mortgage could be the solution. With this mortgage setup, a close relative supports your application by acting as a joint borrower without being added to the title deeds of the property. The lender applies the income multiple to both your incomes, allowing you to borrow more. The relative supporting the application is equally liable for the mortgage payments, but only you are recognised as the owner of the property.

Speak to a Specialist Mortgage Broker

An independent specialist mortgage broker like John Charcol has access to the whole market and can access a range of lenders, making it easier for you to secure a better deal with a potentially higher maximum borrowing.

Apply for a Joint Mortgage

When you apply for a joint mortgage, the lender will use your combined income to calculate how much to lend to you. This typically works out to be significantly more than what you could afford if you were a single applicant. However, if the second applicant has little or no income, it's unlikely to help you borrow much more. Some specialist lenders will consider the income of up to 4 people on one mortgage, although this is still fairly unusual.


Summing Up

Mortgage income multiples play a key role in determining how much a lender is prepared to lend to you. If you have a lower salary, income multiples can feel restrictive. You may also worry that you cannot afford the mortgage you need.

At John Charcol, we’re here to help you secure an affordable mortgage that gets you the home you want. We look at your income and any additional income that may not have been previously considered to maximise your borrowing power and we approach the lender with the best deal for your situation. Get in touch with our team today on 0330 433 2927 to find the right mortgage.


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