Knowing the highest amount you could potentially borrow on a mortgage will help in any property search, especially if you are looking to buy a large home or in an expensive area.
Here, we look at the maximum mortgage you can get and what affects your ability to borrow as much as you can. We also investigate the different maximum amounts for various types of mortgages and remortgages.
What is the maximum mortgage you can get?
Providers have caps on the maximum amount they can extend regardless of an applicant’s income or circumstances. That cap will be set by the provider themselves, but the majority don’t lend above £5 million. Plus, while some lenders like Halifax do go up to £5 million, other well known lenders have much lower limits. The Co-operative, for example, doesn’t usually go above £1.5million.
If you need to borrow more than £5 million, you’ll need a specialist lender. For example, Natwest for Intermediaries go to £10 million but you’ll need a broker for access.
If you’re looking to borrow at much lower levels, but want to maximise what you are eligible for, a good rule of thumb is that the majority of providers use an income multiplier of 4.5. However, lenders have different approaches to calculating the maximum amount they are willing to offer. So, you may find that you are eligible for mortgages that equate to, 5 times or even 6 times your income with the right provider.
Below shows how different multiple incomes can affect the maximum mortgage you can get.
|Income||3x Income||4x Income||5x Income||6x Income|
Mortgages that use higher multiples can be more difficult to be accepted for, though. Your eligibility for borrowing even at 4.5 times will be affected by several factors including the following:
Lenders conduct an affordability assessment to ascertain how much you can afford to borrow. That means they look at your expenditure in terms of regular outgoings such as outstanding debt repayments or school fees. There’s no set amount of outgoings that automatically disqualifies you from a mortgage as this is always offset against your income, but the higher your expenditure, the less a provider is likely to lend to you.
Most lenders require a minimum deposit of 10%. However, putting down more so your loan-to-value ratio (LTV) comes down can indirectly increase your maximum borrowing. Not only does this increase the number of lenders and deals available to you, it also means they will often extend a lower interest rate making your repayments cheaper.
How your credit history might affect things
Having a poor credit history may indirectly impact the amount you are able to secure as there will be fewer approachable lenders. Bad credit mortgages are definitely possible to secure, but there may be fewer providers happy to extend you a mortgage meaning you have fewer options with which to maximise your borrowing.
Additionally, to compensate for the perceived higher risk of the loan, providers may only offer you higher interest rates. As a consequence, you may have to borrow less for your repayments to be affordable.
Head to our credit reports hub to find out how to download your credit reports for free.
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What’s the maximum you can get if you’re self-employed?
When you’re self-employed, you’re entitled to apply for the same mortgage products as someone in full time employment. However, lenders will scrutinise your eligibility criteria to ensure that your income is stable enough to pass affordability assessments.
Every lender has their own criteria for how they will assess affordability for the self-employed.
Some will use the personal drawings taken as profit from the business if you’re a sole trader, or salary and dividends if you’re a company director. A few will even consider your share of the business profit after corporation tax. Some may consider the most recent tax year or others will look at the last 2 or 3 years as an average.
In effect, you could approach six different lenders and be given six different amounts that you could borrow. This is where the knowledge and experience of a broker becomes invaluable.
There are, though, several specialist lenders who have flexibility built into their income assessments. Some do not use income multipliers to determine maximum mortgage amounts, but instead look at applications on a case by case basis. The amount you could borrow can diverge greatly therefore and is dependent on other factors such as your income, your profession and the way your lender of choice calculates affordability.
Mortgage affordability calculator
Our mortgage affordability calculator can give you a rough idea of the maximum amount you could potentially borrow. However, remember that different lenders have different approaches to determining the maximum loan amount for an applicant. Your final mortgage could therefore vary in comparison to our calculation.
Mortgage Affordability Calculator
Our affordability calculator can tell you how much you can potentially borrow from a mortgage lender. Simply enter your total household income below and our calculator will do the rest.
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.
How to get the maximum mortgage allowed
Being approved for the maximum amount allowed means you have to tick all a provider’s boxes.
You can improve your chances of doing so by following these steps:
- Ensure you meet the affordability criteria. For the highest borrowing levels possible, it is crucial you prove to the lender that there are no affordability concerns at all – so collate all the relevant documents to prove you are eligible. That means you need documents to confirm your income, your income source and the overall good health of your financial situation. Importantly, you need to demonstrate your expenditure is not already too high to make a maximum mortgage unaffordable.
- Run a credit check. Download your credit reports to see if there are any instances in your past that may negatively affect your application. If they are erroneous, you can take steps to have them removed so your chances of getting the largest loan possible are improved. If the report is correct, you at least know what issues may affect your application and mitigate against them as best you can.
- Speak to a mortgage specialist. Being approved for the maximum amount you can borrow is down to approaching the provider who looks at your application more favourably than any other lender. To do that, your best bet is to talk to a mortgage broker. Their in-depth knowledge will significantly improve your ability to find that one lender who extends you more than others.
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Things to consider
Borrowing the maximum amount possible obviously gives you more choice in what you can buy, but it does have a couple of downsides that you should consider first.
If you borrow more by accepting a higher interest rate, that will make your mortgage doubly expensive. As, not only is the amount higher, the overall amount of interest you pay is higher too.
Plus, you should also think about the impact that an interest rate rise during the course of your mortgage would cause. Carefully consider whether you could afford the repayments if the rate was to go up.
Just because you can borrow a larger amount of money, does not automatically mean you should. Borrowing at the maximum amount possible could put a larger financial burden on you and your household than necessary. Consider whether having a larger mortgage will affect what else you can do with your life – like holidays, new cars or any other unforeseen instances that crop up.
Maximum amounts for different types of mortgage products
The above information is based on applying for a traditional mortgage. There are several other types of mortgage products available, though, which have their own terms and conditions. Their lending levels subsequently vary too.
Some examples are:
Mortgage providers use rental yields to help determine the highest amount they are willing to extend on a BTL mortgage. Generally speaking, lenders like those yields to sit between 125% to 145% of your repayments. Some specialist lenders may consider your personal income as part of the application. Deposits for these mortgages usually need to be between 20-25%.
The maximum amounts possible for commercial mortgages are determined by looking at a business’s earnings before interest, tax, depreciation and amortisation (EBITDA). Plus, some specialist lenders will allow other assets or income as part of an application to maximise mortgage amounts. However, how much providers extend will vary as every lender will stress test if the business’s income can cover repayments differently.
The amount you can release depends on your age, the equity release product (e.g. lifetime mortgage vs home reversion plan), the property value and the provider. The older you are, the higher the percentage you can release. In terms of products, lifetime mortgages can allow you to release up to 55% of your property value. Home revision plans can mean you could get up to 80% of the property value.
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Maximum remortgage amounts
If you are remortgaging, and looking to borrow more money than the outstanding amount, many lenders cap what they’re willing to extend depending on how you plan to use the extra cash. So, for example, they will loan at different levels if you plan to remortgage to borrow for home improvements, buy the final share of a shared ownership property or even clear outstanding debts.
It is the LTV that you need to look at if you want to maximise your borrowing. Each lender has varying levels of LTV based on the varying uses of the extra money loaned. However, to give you a rough idea of what you can borrow, you can use the same calculation as you would when applying for a traditional mortgage. Look at your combined annual household income, take away your annual expenditure and multiply it by 4 times. As with traditional mortgages, you may find lenders willing to go to 5x your income and maybe even 6.
Speak to a mortgage broker about your maximum borrowing capacity
If you are looking to maximise your mortgage, speaking with a broker is one of the best things you can do. They will look at your financial situation and determine which lender will look most favourably on your application to extend you a loan amount with a high income multiple.
Plus, they will not only improve your chances of being approved, they can also ensure your interest rate is as low as possible – making your larger mortgage more affordable. They can therefore save you money, but also time and stress by guiding you through the process.
Our broker matching service will put you in touch with a specialist whose expertise will make certain that your final mortgage is maximised giving you more options on the property market. Call us today on 0808 189 2301 or make an enquiry so we can put you in touch with an expert.
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