Mortgages Based on Three Times Income

When you’re looking to get a mortgage and working out what you can afford to borrow, your current salary plays an important role in the calculations. But, it’s not the only aspect that makes a difference.

This guide covers what you need to know about getting a mortgage equal or greater to 3 times your salary. You’ll also learn about the other areas that can impact the amount you can borrow, the lenders and rates available, and – where you can find the best support.

Keep reading for all the essential information or click on a link below to jump to a specific section…

Can you get a mortgage based on 3 times your salary in the UK?

Yes, this is definitely possible. Three times your salary is actually below the industry average when it comes to calculating mortgage affordability. So, in most cases, the amount you may be allowed to borrow could be higher.

The average income multiple used for a mortgage is usually 4.5x your salary, which is obviously much higher than 3x. But, it’s important to remember that there are plenty of other factors taken into account during the process. Your personal situation and overall finances affect the total amount you can borrow.

Not every lender will be willing to offer you higher multiples, even if it is the market average. On the other hand, you can sometimes get better-than-average multiples, above 3 to 4.5 times your salary.

Some lenders don’t use income multiples at all. Instead, they’ll take a snapshot of your finances and have their own individual methods of calculating the total amount they’ll let you borrow for a mortgage.

What a 3x salary mortgage looks like

It’s always helpful to visually see what these calculations look like. Most lenders will use your gross annual income for their income multiple calculation; but keep in mind that things such as your debt and expenditure will also play a role. Here’s some examples to give you a rough idea about how much you can borrow on 3 times various salaries:

As you can clearly see, you’d need quite a hefty salary to afford the average UK home based on current prices! This is why it’s important you try and get the highest income multiple that you can when looking for a mortgage – also keep in mind that if you’re applying with another person, the income of everyone who will be named on the mortgage is taken into account.

It’s also worthwhile dealing with lenders who’ll take your full circumstances into account. This potentially allows you to borrow more than 3 times your salary – which is especially helpful if you fall into one of the income brackets towards the lower end.

How a broker can help

When applying for a mortgage based on 3 times your salary, this should open up a greater choice of lenders to you. However, it could limit your property purchasing options, and it doesn’t necessarily mean that they’ll all be offering you great rates.

Using an expert broker means that they can access all the available lenders and current interest rate offers. This often involves deals that aren’t advertised or available to the general public. Not only this, but they can help manage your application from start to finish – making sure you get the ideal outcome for your income and circumstances.

If you want to speak to an experienced broker, just make an enquiry. We’ll set up a free chat between you and a skilled broker who’ll be able to find the mortgage solution you’re looking for.

Other factors that affect how much you can borrow

Your overall circumstances and income history will be taken into account when lenders are reviewing your application. But, there are some areas that are more important than others when it comes to how much you’ll be able to borrow.

Other than simply working out 3 times your salary, here are some more major factors that play a role in the mortgage calculations:

• Your total income: You may be looking to get a mortgage based on 3 times your salary. But, you might qualify for a higher borrowing limit if you have any additional sources of income from a side job, investments, or extra work/overtime.
• Size of your deposit: If you’re able to increase the size of your deposit, this leads to a lower loan-to-value (LTV) ratio, and potentially access to a wider range of lenders and deals, including ones based on higher income multiples.
• Credit: Your credit report will affect the strength of your mortgage application and, indirectly, how much you can potentially borrow. Having bad credit can mean having fewer lenders to choose from, and therefore your chances of landing the mortgage amount you want might be lower.
• Outgoing and existing credit commitments: Lenders will want to take a look at how much you spend, and even what you spend your money on. This doesn’t mean you have to live a thrifty lifestyle. Just keep in mind that your fixed expenditure – including any debts and credit commitments – will be scrutinised, and is another piece in the calculations alongside your earnings as lenders will offset this against your income to work out your debt-to-income (DTI) ratio. Try our DTI calculator below to work out what yours is.

Types of mortgages available

Most of the mortgages available will be the standard range of options. Getting a mortgage solely based on a 3x salary can limit the choice of properties you can afford. But, the most suitable type of mortgage will depend on your situation.

Here’s some examples of the most common loans you’re likely to come across:

• Repayment mortgage: this is the most popular choice where you’ll be paying off your loan in monthly repayments with an agreed level of interest on a fixed or variable rate.
• Interest-only mortgage: with this type of mortgage, you’ll only be paying off the interest. This means lower monthly repayments, but you won’t be lowering the principal debt – this will need to be repaid, in full, at the end of the term using an approved repayment vehicle.
• Buy-to-let (BTL) mortgage: if your plan is to rent out a property, you’ll need a buy-to-let (BTL) mortgage. This kind of mortgage can come with different requirements and limits compared to residential mortgages.

Examples of rates and choice of lenders

Lenders who offer three-times salary mortgages include Aldermore, Santander and Barclays. The rates they offer are generally no different to what is available for other income multiples. At the time of writing (May 2023), the average interest rate for a residential mortgage is between 4% and 5%.

Your available options will vary massively, and not just based on your salary. In order to see the full range of deals, it’s worth using an expert mortgage broker to explore all your choices.

They’ll be able to access rates that aren’t advertised. And, they can look at other ways to stretch your borrowing limit if 3 times your current salary isn’t enough to buy the home you want.

Speak with an expert mortgage broker

Every mortgage application will be unique. So, it’s crucial that you speak with the lenders who are going to be able to create the best borrowing solution for your specific situation and income.

We offer a free-broker matching service. This means we’ll quickly assess your salary and your needs. Then, we’ll pair you up with an expert broker who’ll be able to get you the best terms, rates, and borrowing limit for your circumstances.

Just call 0808 189 0463 or make an enquiry. We’ll set up a free, no obligation chat between you and your ideal mortgage broker today.