Can you get a mortgage on 5 times income?
In this article, we’re going to look at mortgage on 3 times income and 3.5 times income.
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Can You Get Mortgages on 5x Income?
People often ask us this question, so we thought we’d look at it in more detail. Lenders could base your maximum lending potential based on income multiples. This means they take your income and times it by a number to determine the maximum amount you could borrow.
However, while that is the basic idea behind mortgage lending, there are other factors a lender will use such as outgoings, debts and overall affordability and long term sustainability. If you need advice on how much you may be able to borrow, you can always approach the experts at Clever Mortgages for further information.
5X mortgage income calculator
Lending at 5 times your salary carries a greater risk to you and the lender, so it’s very important that you budget carefully. The lender will look more favourably if have the following:
- A good credit score or good credit history – The better your credit history the more likely you are to get accepted by 5x salary lenders. That’s not saying those with a poor or low credit score won’t qualify, but the higher your score the more likely you will.
- A good size deposit – the more money you’ve saved up to use as a deposit the better, this means the lender is sharing the risk with you, since your mortgage loan to property value will be lower.
- Your employment, income and affordability – Having a long term and stable employment will be an advantage to 5x salary lenders. Those with occupations classed as professional will also be looked at favourably. It would also be an advantage to not have lots of committed outgoings, such as loans, HPs and credit cards.
So I can borrow 5x salary?
It is possible, yes, although not all applicants will be able to borrow five times their salary. Some lenders may cap their offers at four times or four and a half times the gross salary amount. This may apply to individual applicants and to couples.
However, some lenders specialise in offering larger mortgages to certain applicants. Clever Mortgages knows the mortgage market inside out. If you are looking for mortgages on 5x your income, chat to one of our mortgage advisors today to find out how they might be able to help. Sometimes it is a question of applying to a specific lender. While one might say no, another could say yes.
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5 times salary FAQ
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Yes, they do – at least some do – but you’ll need to undergo a financial evaluation to be considered for one. Indeed, this applies to all mortgage applications. Even if you have a good income, your outgoings will be taken into account for an overall affordability picture for a lender. The higher your outgoings, the more problematic this salary multiple might be. If you have savings, lower and more affordable outgoings, and a good credit record, you are more likely to be considered for the 5x multiple on your income.
While you could get a 5x salary mortgage in the past, lenders now need to apply the findings of the Mortgage Market Review that first came in back in 2014. This means they don’t just need to make sure you can afford the mortgage now. They also need to be sure you could continue to afford to repay it if interest rates increased in the future.
It depends on which lender you approach. Each lender has parameters they work within. This means that some lenders won’t go beyond 4-4.5 times your income while others will consider it. The 4x to 4.5x multiples are commonplace but are not at the extreme end of possibilities.
This is the most important question to ask – and answer – because it depends on more than just a multiple. It’s the reason why many mortgage calculators give a range rather than an exact figure. For example, you can type in your income and any guaranteed overtime you get. You’ll then ask the calculator to give you a result and it could tell you that you might be able to borrow between one figure and another one. This usually considers different multiples.
Remember that lenders base the multiple on your gross salary and any other income you can guarantee you’ll receive each month. If you work on a lower basic salary with lots of bonuses and commission, you’re likely to find it harder to get the mortgage you want. That’s because the bonus and commission part is uncertain.
As we mentioned earlier, we know that some lenders may consider extending 5x income deals to some mortgage applicants. However, you may see certain conditions attached to such offers. For example, it may be restricted to certain professional occupations or those willing to accept a mortgage deal running for at least five years. This means if you wanted to change your mortgage deal within that time, it’s likely you would incur an early repayment charge until the deal period expired.
The advisors at Clever Mortgages can let you know who is willing to lend 5x your salary and whether there are any conditions for doing so. We’ll help guide you towards the right mortgage.
The answer might be yes for some readers and no for others – and this is important to understand. While a simple multiple is easy to understand, it doesn’t give the whole picture. For example, the more you can supply as a deposit, the less you’ll need to borrow. This also opens the way to more affordable deals.
A lender is also going to look at your credit history and consider how much they are willing to lend to you. The more creditworthy you are, the more likely it is you’ll find it easier to be considered for 5x income mortgages.
It is more challenging to get a 5x salary mortgage, which makes it more important to seek professional advice in this area. If you contact Clever Mortgages today, you can take advantage of the experience and knowledge of one of our friendly mortgage brokers. It could make all the difference.