Table of Content
Introduction
If you receive investment income from stocks, shares, or other financial assets, this may be your primary source of income or an additional stream alongside your salary. If you plan to maintain your investments while purchasing a property, you’ll be pleased to know that some lenders will consider this income when assessing your mortgage application. However, as only a small pool of lenders cater to this niche, it’s crucial to seek expert mortgage advice to find the best solution for your situation.
How Do Lenders Assess Investment Income?
The assessment of investment income varies among lenders. Some take an average of your income over the past two or three years, while others assess a percentage of your total portfolio. Additionally, certain lenders require your investment funds to have been at a specific level for a minimum period, typically 12 to 24 months. If you plan to use some of your investment income for a deposit, ensure that it won’t be significantly reduced, as lenders prefer stable, ongoing income streams.
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How Much Can You Borrow?
The amount you can borrow depends on the lender’s criteria and your overall financial profile. Some lenders will consider 100% of your investment income, while others may only accept 50% of it. Mortgage providers then apply income multiples, usually ranging between 4.5 and 5.5 times your income.
For example:
- If your investment income is £100,000 and a lender considers 100% of it with a 4.5x multiple, you may be able to borrow £450,000.
- If the lender only accepts 50% of your investment income, the calculation would be based on £50,000, reducing the borrowing potential to £225,000.
Choosing the right lender can make a significant difference in your borrowing power.
What Mortgage Setups Are Available?
Investment income mortgages are available on both capital repayment and interest-only terms. If you opt for an interest-only mortgage, you will need a suitable repayment vehicle and sufficient equity in the property. Additionally, some lenders may offer offset mortgages, which can be beneficial for borrowers with significant savings or investment funds.
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What Mortgage Rates Are Available?
The interest rates for investment income mortgages are generally the same as those offered to other income types. However, securing a competitive rate depends on meeting the lender’s criteria. If you require a specialist lender, the rates may be slightly higher, whereas mainstream lenders typically offer competitive options. At Strive, we have access to exclusive mortgage rates that may not be available elsewhere.
How Much Deposit Is Needed?
Deposit requirements for investment income mortgages are similar to those for standard mortgage applications. In many cases, a 5% or 10% deposit is sufficient, depending on factors such as your credit score, affordability, residency status, and the type of property you’re purchasing. Meeting lender criteria is key to securing a mortgage with a lower deposit.
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How Can Strive Help as Your Mortgage Broker?
At Strive, we specialize in helping clients secure mortgages using investment income. Our services include:
- Access to a wide range of lenders, including those that accept investment income.
- Exclusive mortgage rates that may not be available elsewhere.
- Expert guidance on lender criteria and eligibility requirements.
- A seamless application process, managing paperwork and lender communications from start to finish.
- Years of experience working with clients in similar financial situations and strong relationships with mortgage providers.
Get Expert Advice Today
If you’re considering a mortgage using investment income, Strive can help you navigate the process and secure the best deal. Contact us today to discuss your options and take the next step toward homeownership.
FAQs
Yes, but it depends on the lender’s criteria and how they assess your income. Some lenders accept 100% of investment income, while others only consider a portion of it.
Some lenders require you to have held your investment funds for 12-24 months to demonstrate financial stability.
Yes, but if your investment income significantly reduces as a result, some lenders may reconsider your affordability.
Not necessarily. If you meet mainstream lender criteria, you can access competitive rates. However, specialist lenders may charge slightly higher rates.
Working with a mortgage broker like Strive ensures you access the right lenders, competitive rates, and expert advice tailored to your financial situation.
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Jamie Elvin
Jamie is an expert in all things mortgages, and our most experienced broker. Connect with Jamie and get started to see how Strive Mortgages can help you.
