In this article, we’ll look at income multiples, how mortgage lenders calculate your affordability and how much you can borrow based on your current salary.
In this article:
What are mortgage income multiples?
A mortgage income multiple is simply a multiple of your annual income, used by mortgage lenders to get an idea of the size of home loan you might be able to afford.
For example, if you were earning £40,000 a year and a lender used a mortgage income multiple of 4, then they would take 4 x £40,000 – £160,000 – as the maximum they would be prepared to lend you.
How much mortgage can you borrow based on your salary?
Typically 4.5 times your salary, although some lenders will stretch further than this. Enter your salary below, (combined salaries for a joint application) to see how much you could potentially borrow.
Mortgage Affordability Calculator
Our affordability calculator will tell you the limits that most lenders will stretch to for your current salary, based on the common income multiples.
You could borrow up to
Most lenders would consider letting you borrow
This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.
Some lenders would consider letting you borrow
This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.
A minority of lenders would consider letting you borrow
This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.
Get Started with an expert broker to find out exactly how much you could borrow.
Mortgage calculators can be useful to get a rough idea of your total borrowing, but keep in mind that they are unable to take into account your personal circumstances, and therefore there may be additional factors that affect the actual amount you can borrow.
There also are some lenders that don’t rely on income multiples and you will typically need to speak to a broker to access them.
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How lenders calculate affordability
Most lenders use a multiple of your income based on their affordability assessment to determine how much they’re willing to let you borrow. They will also factor in your outgoings and offset this against the amount you earn.
Whilst the typical borrower can expect to be offered between 4 and 4.5 times their salary, it’s possible to find lenders willing to offer more than that.
As you can see, even as little as 0.5 difference in the income multiple can make a staggering difference in the size of the loan you can borrow, and, more importantly, the type of property that you can afford.
How to borrow more
To access higher levels of borrowing, there are a number of steps you can take:
Speak to a specialist broker
As high street lenders tend to be more restrictive with their lending, it’s often specialist lenders that can offer more generous salary multiples. Using a whole-of-market broker provides you with the best opportunity to access those lenders.
In fact, some specialist lenders are only available via an intermediary such as a broker, so if your main goal is to borrow more than your typical bank will offer, it’s highly recommended that you speak to a broker, like those that we work with.
There are brokers in our network who have specific expertise in maximising lending and can prevent you from missing out on a more suitable deal that you wouldn’t find online.
Some of the benefits (not limited to) of using a mortgage broker from our network are as follows:
- Access to a wide range of lenders who offer 5 times salary and 6 times salary mortgages
- Able to borrow based on salary plus 100% of any supplemental income, such as benefits, pension income or freelance work
- Borrowing options are still available for high debt-to-income customers with via lenders with a higher appetite for risk
- Access to the entire market, including mortgages based on higher income multiples and exclusive, broker-only deals for customers in certain professions
- Bespoke, impartial advice about rates and deals from across the entire market
Some considerations if you go directly to a bank:
- Risk of having borrowing capped at 4.5 times your annual salary
- Might be able to borrow based only on your main salary
- Risk being declined if your debt-to-income ratio is high
- Access to just one range of mortgage products
- Lender likely to upsell their own products and services only
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Increase your deposit size
A larger deposit can persuade lenders that you’re a safe bet and subsequently give you a larger pool to choose from.
Offering more than the minimum amount necessary (5-10%) will encourage some lenders to lend to you at higher multiples of your income, as well as at more competitive interest rates.
Another point to note is that it will reduce the amount you need to borrow, therefore making it easier to pass the affordability assessment. For example, in the case of a £200,000 home:
- Provide a 5% deposit – (£10k) you’ll need to borrow £190,000
- Provide a 15% deposit – (£30k) you’ll need to borrow £160,000, which is easier to achieve
Include supplemental income
Bonuses, overtime and commission can all count towards your affordability asssessment, and in each instance evidence will need to be provided through payslips, often taken as an average over a period of months or years. How much of a bonus is accepted will usually depend on whether or not the bonus is guaranteed or discretionary.
The table below gives an overview of what to expect. As you can see, approaches vary significantly between lenders, so if any of these apply to you then talk to your broker so that they can prioritise your different income types and find the best lender.
|Income Types||% Considered||Notes:|
|Basic Pay||100%||Taken from payslips/contract|
|Regular Overtime||50-100%||Usually average of last 3 months|
|Irregular Overtime||0-100%||Usually average of last 3 months|
|Annual Bonus||0-100%||Taken from payslips/P60|
|Quarterly Bonus||0-100%||From payslips (Usually avg. of last 12 months)|
|Monthly Bonus||0-100%||From payslips (Usually avg. of last 3-12 months)|
|Commission||0-100%||From payslips (Usually avg. of last 3-12 months)|
|London Weighting||0-100%||From payslips|
|Car Allowance||0-100%||From payslips|
|Shift Allowance||0-100%||From payslips (Usually avg. of last 3 months)|
Use a guarantor
If you’ve already stretched your income as far as possible and are still unable to buy the home you want, a guarantor mortgage could be the answer. There are various options available, but the concept is that your borrowing, or an element of it, is secured by a guarantor, usually on their property, income, or savings.
Joint mortgage borrowing
If you’re applying for a mortgage jointly with someone else, lenders will use your combined incomes to determine how much you can borrow, which usually works out to much more than either applicant could afford on their own. Of course, this depends on both parties’ circumstances, and the addition of an applicant with very little or no income is unlikely to be very beneficial.
Some mortgage lenders will even consider the income of up to 4 applicants on one mortgage, however, this is fairly niche and is more likely to be available through specialist brokers.
|Salary A||Salary B||Total Joint Salaries||4x Joint Salaries||5x Joint Salaries||6x Joint Salaries|
Which lenders offer higher income multiples?
There are a few high street lenders who will offer higher salary multiple mortgages – usually between 5 times and six times income – in the right circumstances, although much of the high-level borrowing on the market is provided by more specialist lenders.
- Barclays: Currently offers up to 5.5* times the income of applicants, so long as the LTV is 85% or less, and at least one applicant earns more than £75k or joint applicants earn more than £100k between them. This is only available for capital repayment mortgages.
- Halifax: Currently offers up to 5 times the income of applicants who earn more than £75k on loans of up to £750,000 with an LTV of between 75-85%
- HSBC: Currently offers up to 4.49 times the income of applicants who earn at least £50,000 on loans with a maximum LTV of 80%
- Kensington: Can consider up to x6 salary mortgages but has been known to reserve this multiple for people in specific professions
* individual banks’ terms can change at any time at their discretion.
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Other factors that affect how much you can borrow
Aside from your income, some of the most common factors that can impact how much you can borrow can be found below, but it’s important to bear in mind that each lender may apply these criteria differently:
Lenders tend to favour those applicants that are in careers that they consider to be low-risk. Applicants in these careers are therefore often able to borrow higher multiples of their income from some lenders. This includes those with a clearly structured career path, such as police or similar key workers, or those that require a professional qualification, such as teachers, doctors, and solicitors.
Minimum income requirement
Not all lenders have a minimum income requirement, but those that do typically have stricter criteria the more you borrow. For example, of those lenders with a minimum income requirement who offer loans of up to 5 times your income, the minimum salary is £40k-£50k, whereas, for more typical borrowing, £20-£25k is standard.
Lenders don’t list a minimum credit score requirement on their mortgage products, however, most will be looking for a strong overall credit profile, and the higher the level of borrowing, the less likely it is that a history of adverse credit will be acceptable.
This means that most high street lenders will be unlikely to offer the maximum income multiple that they have available to those with poor credit, even if their income is adequate.
Existing financial responsibilities
Lenders will tend to use only your expendable income in their affordability assessments, deducting all of your existing outgoings from your annual income to find your debt-to-income ratio. Whatever’s left over is considered your actual ‘usable income’. If you have a high salary, but also very high outgoings, it could impact how much you can borrow.
Earnings = £100k
Outgoings = £30k
Usable income = £70k (this will be the figure that’s multiplied to calculate your loan)
While lenders want to get a clear picture of your finances, they won’t be checking up on every penny you spend or questioning your weekly supermarket shop. They will be interested though in other borrowing commitments that could impact your ability to meet your mortgage repayments, so this will include credit card debt, personal loans, hire purchase and other forms of debt.
Some common items that might show up on your credit file, such as mobile phone contracts, are often ignored for affordability calculations and if you have a debt that only has a few months left to run or is due to be cleared before you complete your house purchase, some lenders can ignore these too.
Debt to Income Ratio Calculator
You can use our debt-to-income (DTI) ratio calculator to work out how much of your income is going towards your fixed outgoings, expressed as a percentage. Based on that percentage, this tool will tell you whether mortgage lenders will class your DTI as low, medium or high.
Your Debt to Income Ratio is %
Good news! Most mortgage lenders will class your debt-to-income ratio as low. You’re unlikely to be declined for a mortgage based on your outgoings, but speaking to a mortgage broker before applying is still recommended as they can improve your chances of getting the best deal.
Most mortgage lenders will class your debt-to-income ratio as moderate, which means some of them might view your application with caution. Some lenders are much more strict than others when it comes to affordability and debt, so it’s important for you to find a lender who’s more lenient. You should speak to a mortgage broker before you apply to ensure you’re matched with a lender whose criteria you fit.
Most mortgage lenders will class your debt-to-income ratio as high. But that’s where we can help! With so much of your monthly income going towards debt repayments, you could struggle to get approved for a mortgage without the help of a mortgage broker. We can help you find a lender who’s more lenient on debt and affordability, and could still secure a mortgage approval.
As well as the profession you’re in, the way you’re employed can have an impact on how much you can borrow. On the whole, high street lenders tend to prefer employed applicants, as they’re considered lower risk. That said, self-employed applicants can generally achieve the same level of borrowing as other applicants, with 4.5 being typical, so long as they’re able to meet the lending criteria.
If you’re self-employed and looking to secure a loan based on higher income multiples, however, you’ll find that many lenders have specific requirements for the following…
- Sole traders – Most lenders will use an average of the last 2-3 years’ net profits as your income figure.
- Limited company directors – Most lenders use an average of your salary and dividends over the past 2-3 years as your income figure, although some will look at retained profits for limited company director mortgages.
- Partners – Providing you own 25% share or more of the limited liability partnership, your share of average net profits over the last 2-3 years will be considered income for mortgage purposes.
- Contractors – Lenders may use an annualised version of your day rate or an average of your net profits, depending on the type of contractor you are. Those working under umbrella companies will usually be treated as employees.
The good news is that there are lenders who specialise in self-employed lending, and they are much more likely to be able to accommodate higher lending limits for self-employed applicants. You can find out more in our guide to self-employed mortgages.
Get matched with a broker experienced in higher-income multiple mortgages
Mortgage calculators can be helpful, but If your main goal is to stretch your borrowing to achieve the highest mortgage possible, it’s important to find a lender that is flexible enough to consider that based on your individual circumstances.
The whole-of-market brokers that we work with have access to every lender, so they can provide a bespoke calculation based on your exact circumstances, that considers every possibility. They also have strong working relationships with those lenders who are most likely to make the best use of your income.
So whether you’re self-employed, a professional, or are looking for a lender who will consider 100% of your supplemental income, they will know which lender will maximise your borrowing as far as possible.
Call us on 0808 189 2301 or make an enquiry to make use of our free mortgage broker matching service, and we’ll put you in touch with an expert broker who is best able to help you achieve your home ownership goals.
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In certain circumstances, it may be possible to borrow more than the maximum income limit of most lenders, which is typically 6 times your income. However, this level of borrowing is typically reserved for high-net-worth individuals. There are far fewer lenders equipped to deal with the often complex finances of high-net-worth individuals, but, those that are, tend to specialise in high net worth mortgages exclusively.
This type of applicant may be able to borrow 7 times their salary, or potentially even more than that, depending on their circumstances. A specialist broker will generally be needed to access this niche area of lending.
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