A guide to getting a mortgage more than 5 times salary  image

A guide to getting a mortgage more than 5 times salary

Every month, we get calls from customers who have encountered mortgage lenders that are hesitant of financing anything beyond 4-4.5x their annual income. Read on to learn everything there is to know about potentially getting a mortgage that is 5 times your salary.

What exactly is a five-times-salary mortgage?

Mortgage lenders often utilise income multiples to determine the total amount of money they may offer to a particular borrower. Income multiples are calculated as a multiple of your yearly gross earnings. For example, if your yearly gross salary is £30,000 and your lender uses an earnings multiple of 5, you may possibly borrow £150,000 from them.

Although many lenders will be cautious about providing such a large sum of money in contrast to an individual's salary, don't be shocked if the lending conditions for mortgage contracts with high-income multiples are stricter than those for mortgage agreements with lower income multiples.

There are many lenders who offer these types of mortgage, and finding one that does may enable you to purchase a larger and more expensive home. However, as with any type of loan, there are some factors to consider to take into account, the most important of which is whether or not you can afford to take out loans of that much money in the first place.

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Will I be able to obtain a mortgage five times my salary?

You’ll be pleased to know that there are a number of lenders that will offer a mortgage five, or even 6, times your salary. Most mortgage lenders, however, tend to give 4.5 times a salary point.

Banks and lenders in the United Kingdom may consider a variety of variables that impact your capacity to repay your mortgage repayments in full and on time, including the following:

  1. Income
  2. Expenses incurred on a monthly basis
  3. Loan-to-value ratio (LTV)
  4. The deposit amount
  5. Credit history
  6. Age

Why it is sometimes difficult to get a five-times-your-salary mortgage?

Simply said, the vast majority of lending institutions in the United Kingdom restrict their lending to 4-4.5 times annual household income. The Bank of England imposes restrictions to help stop mortgage suppliers from holding more than 15 percent of their mortgage loans at 4.5x or higher interest rates.

If you aren't familiar with the industry, it might be tough to locate lenders that are ready to issue mortgages depending on more than 4.5 times income. Despite the fact that some of them are popular mortgage providers, the ones that provide the highest rates on these mortgage packages are generally specialty lenders and challenger banks that you won't discover on the high street or by doing a fast Google search on the subject.

It's a good thing, however, because there are brokers in our database who are experts in five-times-income loans, and they know precisely which lenders will potentially approve them and under what conditions.

What factors impact your ability to secure a mortgage for more than five times your annual wage?

Factors such as credit card debt and personal loans both have an influence on the amount of money that may be leased out, as well as contributions to a retirement plan. A mortgage more than five times one's annual wage is much more complicated and will always be personally underwritten, resulting in longer processing. It's likely that the lender will ask for extensive supporting documents and will question the size and consistency of your outgoings.

A 5-times-income mortgage requires a 20% deposit. How much do I need to put down?

Depending on the kind of mortgage product you choose to apply for, you will need a different amount of deposit. In contrast to buy-to-let mortgages, which pose a greater risk to a lender, residential mortgages often have lower down payment requirements.

Homeownership is dependent on the borrower's capacity to make monthly mortgage payments, while buy-to-let is dependent on the borrower's ability to locate tenants who will pay rent on a regular basis.

It's possible to get a loan with just a 5 percent down payment for a home purchase, while some lenders may want a 10 percent deposit, in which case your loan-to-value ratio would be 90%.

Having a larger deposit may allow you to take advantage of lower interest rates, so it may be worthwhile to save for a bit longer in order to pay very little for your mortgage in the long run in certain cases.

Contact a skilled and experienced mortgage broker today

The availability of mortgages that are five times your annual salary might be tough to come by. It is suggested that you get specialised assistance from a broker because most mortgage lenders would not give an income multiple this high.

There are advisers in our network who are experts in five-times-salary loans, and they have long-standing contacts with the lenders that provide these types of financing. Speaking with one of them before you apply for a mortgage may increase your chances of finding a lender that offers 5-times-income packages, as well as increasing your chances of receiving the most positive interest rate available.

Get in touch with WIS Mortgages today

As a mortgage broker or mortgage advisor in Kent, London, Essex and Buckinghamshire, we're delighted to offer free specialist advice for contractors with zero fees. As well as accounting (WIS Accountancy), insurance (WIS Business Protection), wealth management, and pensions, we're beyond proud to offer a wealth management and pensions division. Make sure to get in touch with our expert and friendly team for free advice or use our mortgage calculators today.

NOTE: As a mortgage is secured against your home or property, it may be repossessed if you do not keep up with the mortgage repayments.

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