How Much Can I borrow For A Mortgage?
When buying a new home, the key question is, 'How much can I borrow?' Typically you can borrow around 4.5 times your income, but it is possible to borrow 5.5 to 6 times your income, depending on your circumstances. Is it as simple as using an online mortgage calculator to determine how much you can borrow? In most cases, not quite, but they are helpful tools to guide you.
Here we break down how to use a mortgage calculator and how mortgage lenders work out how much you can borrow. We've also thrown in 5 top tips on how to maximise your borrowing power and get a high income multiple mortgage deal.
Our Guide to Mortgage Borrowing
1. Mortgage borrowing calculator
2. How to use a mortgage calculator
3. How do mortgage lenders work out how much you can borrow?
4. Can I get a mortgage more than 4.5 times your salary
5. 5 ways you could borrow more on your mortgage
6. How to find a high income multiple mortgage deal
Mortgage borrowing calculator
Use our mortgage calculator to instantly determine how much you could borrow to buy a house based on your income. Enter your income into the first box if it's a sole application. If you have a partner or co-applicant, enter their income into the second box,
Total you may be able to borrow:
The good news is that many lenders take a flexible approach to your income!
While an income multiple is used by lenders often other factors come into play that will allow you to borrow more.
- The deposit you have - the more deposit you can put down, typically the better
- Your total income situation - income from all sources e.g. commission, dividends, rent, including the income of anyone you are buying with. Some lenders will factor in family or friends' income. A joint borrower sole proprietor mortgage is a mortgage where the buyer can add a family member or friend's income to their mortgage application
- Your monthly outgoings - what financial commitments you have every month will come into play
- Your credit history - do you know what your credit score is? Lenders will look at your credit file before deciding to lend. We recommend you check your credit report
- Your employment status - employed, self-employed, retired
- Your residency status - UK resident, UK national living and working abroad, foreign national living in the UK
Important: The above calculations are to provide you with an example of what you could borrow and are not guaranteed
How to use a mortgage calculator
You can use a mortgage calculator to estimate how much you can borrow to buy a house based on your annual income and the income of any co-buyers. Using the calculator, you can determine the maximum loan amount you might be eligible for from a mortgage lender.
Lenders, however, will also consider other factors when determining your affordability that is not accounted for by mortgage calculators.
You should remember that a mortgage calculator can only give you an estimate.
How do mortgage lenders work out how much you can borrow?
This is where it gets a bit more complex, as every lender has different criteria for assessing risk. They are legally obliged to ensure that you, as the borrower, can afford the repayments on your mortgage loan.
To do this, most lenders will assess your affordability using the following criteria:
Income: Your salary, pensions, bonuses, dividends, commission, investments, state benefits or maintenance payments are all considered income.
Expenses: Lenders have different ways of calculating your monthly expenditure. They may request your bank statements or use data from the national statistics office to calculate your essential expenses such as groceries, energy bills, and childcare.
Debt: Any existing debt commitments, including credit cards, overdrafts, car loans and student loans, will all be factored in.
Deposit: How much you have to put down as a deposit for your mortgage will affect your affordability. The lower the loan to value (LTV), the lower the rate of interest you'll be charged - thus, in theory, stretching your affordability.
Employment status: Whether you are employed full-time, part-time, self-employed, unemployed, or retired can have a strong influence on a lender's perceived risk.
Credit history: Your credit score reflects your ability to repay debt. If you have missed payments, any county court judgments (CCJs), individual voluntary arrangements (IVAs), or have been declared bankrupt, a stressed rate will be applied to your interest payments, which may mean a loan is unaffordable for you.
Can I get a mortgage more than 4.5 times your salary
The best way to get a mortgage with a higher income multiple is to use a specialist mortgage broker. Whole of market mortgage brokers can access a wide range of lenders and know how to negotiate terms on your behalf.
Many high street lenders use a tick box system to determine your borrowing power when you approach them independently. Your application will be rejected if you do not meet their standardised criteria.
5 ways you can borrow more on your mortgage
#1. Your credit profile
Lenders can see how you manage credit through your credit profile. The income multiplier may be lower if you have missed payments, defaulted, or received a county court judgement (CCJ). However, how you manage any credit you have is more significant than your score. A low score is not always an indication of poor credit conduct; it could also be because you don't use credit.
Lenders won't always read between the lines, but if credit issues are resolved when you apply for a mortgage, they may still be willing to give you a 4.5 multiple of your income. If you have credit issues, using a mortgage broker is the best way to get the size of loan you need with the best mortgage rates.
#2. Your level of income
Most lenders will lend 4.5 times your income as standard, but exceptions exist for higher income earners.
- Annual income over £60,000: some lenders will consider an income multiple of 5 times your salary
- Annual income over £75,000: you could borrow 5.5 times your salary
- Annual income over £100,000: you could borrow up to 6 times your salary
#3. Your employment type
Higher lending levels are often reserved for individuals in certain professional employment. A professional mortgage of up to 6 times income can be available for the following professionals who are fully qualified, practising and registered with the appropriate UK professional body. This includes:
There are also special considerations for IT contractors, where affordability is calculated on the daily rate rather than an annual tax return.
Company directors who own over 20% shareholding can also benefit from special consideration. Some lenders will consider their salary and the company's net profit after tax to calculate affordability.
#4. Additional security
When applying for a large mortgage loan, you can leverage assets you may have in the background as proof of income.
- Income generated from a property portfolio can be included in your overall income
- Private banks will accept an investment portfolio, income from a family trust, and company-retained profit.
#5. Use a specialist mortgage broker
An experienced mortgage advisor is well-connected, has expert knowledge of all the mortgage options available across the market, and can advise on high income multiple mortgages that you may not be able to access otherwise.
They can suggest lenders who will look favourably at your particular circumstances and package your application to demonstrate your eligibility for larger loans.
Using a mortgage broker, you may receive a more generous mortgage offer, a lower interest rate, or a more flexible repayment schedule that suits your needs.
How to find a high income multiple mortgage deal
Many of our clients have borrowing needs outside the tick box limitations set by many high street lenders and find our service particularly valuable.
- Are you looking for a mortgage over 4.5 times your income?
- Do you have a small deposit but high earnings potential?
- Are you hoping to use assets in addition to your earnings to leverage higher borrowing?
- Are you looking for mortgage finance that can accommodate complex income?
At Clifton Private Finance, our expert mortgage advisors can connect you with the best lenders to maximise your borrowing and find the best high value mortgage deal.
Our experience and connections with high street and specialist lenders mean we can negotiate bespoke mortgage terms for our clients.