Given the vast sums of money required to buy a home these days, it’s often the case that buyers need to stretch their borrowing power as much as possible to afford suitable properties.
On average, most mortgage lenders consider lending around 4.5 times a borrowers income, however borrowing above standard income multiples is possible. Whether it’s possible will depend on several factors, including your income, credit score, your employment status, and the lender’s criteria.
Some lenders may be more willing to lend at higher multiples, while others may be more conservative.
If you want to buy a property that is beyond the normal mortgage parameters, such as borrowing at 5x your income, there are some additional factors that you will need to consider.
Here we outline whether borrowing at 5x your income is possible and some of the common criteria that lenders may consider.
Can you get a mortgage based on 5 times your salary?
Yes, it’s certainly possible, Most lenders have a standard lending criteria of offering mortgages that are around 4.5 times the borrower’s annual income.
However, this may vary depending on the lender’s policies and the individual borrower’s financial situation.
Some lenders may be willing to lend more than 4.5 times the borrower’s annual income, but this may come with stricter eligibility criteria and potentially higher interest rates to offset the additional risk.
If you qualify for higher loan to income products, some lenders may offer mortgages based on a higher income multiple, such as 5.5 or 6 x salary, these options are typically reserved for borrowers with exceptional financial circumstances.
For example, high earners with a very low debt-to-income ratio and substantial assets may be eligible for higher income multiples.
Calculate how much you can borrow
It may be helpful to compare borrowing amounts based on different income multiples.
Example income multiples table
|SALARY||4.5x SALARY||5x SALARY||5.5 x SALARY|
How to go about borrowing 5 x income?
The first stage in finding out if you can borrow 5 x income or more, is to speak with an independent mortgage broker.
Working with an experienced mortgage broker like Strive Mortgages can be beneficial when seeking a higher income multiple mortgage, as they can help borrowers navigate the application process and identify lenders that may be more willing to offer this type of borrowing.
Brokers may also be able to negotiate lower interest rates or better terms on behalf of the borrower, which could result in lower overall debt costs.
What other factors affect amount you can borrow on a mortgage?
We’ve summarised a few key points below, however our How can I get a bigger mortgage guide explains in more detail how you may be able increase your chances of securing the mortgage amount you require.
Shop around: It’s important to compare different lenders to find one that is willing to offer a mortgage with a loan-to-income ratio of 5 times income. Different lenders have different eligibility criteria, and some may be more flexible than others. A mortgage broker can help you with this.
– Improve your credit rating: Your credit rating is a key factor in determining whether you will be approved for a mortgage and at what interest rate. By improving your credit rating, you can increase your chances of being approved for a 5 times income mortgage. This can include paying off any outstanding debts, making sure you are on the electoral roll, and avoiding applying for credit in the months leading up to your
– Put a bigger deposit down: Lenders are more likely to approve a higher loan-to-income ratio if you are able to put down a larger deposit. This reduces the lender’s risk and shows that you are committed to the property purchase.
– Extend the loan term: Extending the loan term can reduce your monthly repayments and make it easier to meet the affordability requirements for a 5 times income mortgage. However, this will also increase the overall amount of interest you pay over the life of the mortgage.
– Get a joint mortgage or joint borrower sole proprietor mortgage: By getting a joint mortgage with a partner or family member, you can combine
your incomes and increase the amount you are able to borrow. Alternatively, a joint borrower sole proprietor mortgage allows you to add a family member’s income to your application without them having any legal claim to the property.
Which lenders offer 5 times salary mortgages?
While some big-name lenders offer mortgages with income multiples of 5x or higher, there are also many niche lenders who specialise in providing flexible, high-income multiples.
These lenders may have different criteria and requirements for qualification, and they may not be as well-know or easily accessible as the larger, more mainstream lenders.
Barclays, Halifax, Nationwide, HSBC, TSB, Accord and many more all consider 5 x income of higher, but each lenders criteria varies considerably.
What are the typical rates you should expect?
Interest rates for mortgages with high income multiples can vary significantly depending on the lender, the size of the mortgage, the term of the mortgage, and other factors.
Interest rates may be lower if you qualify with mainstream lenders compared to specialist lenders.
Can you get 5 times your salary based on joint incomes?
Yes, it’s possible to get a mortgage with an income multiple of 5x or higher based on joint incomes.
In fact, joint mortgages can be a good way to increase the amount you can borrow, because lenders will take into account the combined incomes for both applicants when assessing affordability.
As we mentioned earlier, the highest income multiples are typically reserved for borrowers with exceptional financial circumstances. Having two combined incomes may push you into this bracket.
They may also bring more deposit to the table, which again could increase your chances of securing 5 x income or higher.
Article: joint mortgages
Can I get 5 x income if I’m self-employed?
Yes, it’s possible to get a mortgage with an Income multiple of 5x or higher if you’re self-employed.
However, the application process may be more complex than for those who are employed, as Self-Employed borrowers typically need to provide additional documentation to prove their income and financial stability.
To qualify for a high-income multiple mortgage; self-employed borrowers will typically need to provide at lease two to three years of business accounts or tax returns, although there are exceptions to the rule.
Can I get 5 x income if I’ve got bad credit?
Having bad credit will always limit your options, but it’s certainly not impossible to get 5 times income with bad credit. The severity of the adverse credit will have a determining factor and having a bigger deposit will give you more options. Some adverse credit mortgages offer reduced income multiples to applicants with bad credit, but that’s not always the case.
How can Strive Mortgages help you secure a mortgage 5 x your income or higher?
Working with an experienced, independent mortgage broker like Strive Mortgages can help you get a mortgage with a loan-to-income ratio of 5 times your income by leveraging their knowledge and experience of the mortgage market. Here are a few ways that we may be may be able to help:
– Finding the right lender: Not all mortgage lenders are willing to lend at a loan-to-income ratio of 5 times income, and the ones that do may have different eligibility criteria and lending policies. A mortgage broker can help you identify which lenders are most likely to consider your application and negotiate with them on your behalf to secure the best possible mortgage deal.
– Presenting your case: A mortgage broker can help you present your financial situation in the best possible light to lenders. They can advise you on how to improve your credit score, reduce your debts, and demonstrate your affordability to increase your chances of getting approved for a mortgage with a loan-to-income ratio of 5 times income.
– Providing expert advice: A mortgage broker can provide expert advice on the different types of mortgages available, the pros and cons of each, and which ones are most suitable for your specific circumstances. They can also advise you on the costs associated with buying a property and help you understand the legal and financial implications of taking out a mortgage.
– Managing the application process: A mortgage broker can manage the entire mortgage application process on your behalf, including completing the paperwork, liaising with the lender, and ensuring that everything is submitted on time. This can help reduce the stress and complexity of buying a property, especially if you’re a first-time buyer or are unfamiliar with the mortgage market.