Mortgages Based on 4-4.5 Times Salary

If you’re looking to buy a property, a crucial first step is to work out how much you can afford to borrow. With most mortgage lenders, the maximum amount you can borrow will be 4.5 times your annual salary.

This guide will help you understand income multiples, give you an idea of your borrowing limit, and explain how a broker can help you find a mortgage you can afford.

Can you get a mortgage based on 4.5 times your salary?

Yes, you can borrow up to 4.5 times your salary from a mortgage lender, as long as you match their criteria. Generally, borrowing 4 to 4.5 times your income is the standard multiple offered by most lenders.

So if your annual salary was £20,000, you could borrow a maximum of £90,000 from a typical lender. If you’re buying with someone else, such as your partner, then your combined income is multiplied to work out the maximum you can borrow.

However, some lenders may cap their lending at just 3 or 4 times your income, depending on your situation. To qualify for the higher 4.5 times mortgage rate, you will need to ensure you meet all of the lender’s eligibility and affordability criteria. A mortgage broker can help match you to a lender whose criteria you’re more likely to match.

Can you borrow more than 4.5 x salary?

Some lenders offer income multiples of 5 or even 6 times salary. Usually, these higher income multiples are only offered to borrowers in specific situations, such as professionals like doctors and dentists, essential workers like teachers or firefighters, or to very high earners with salaries above £60,000 or so a year. Applicants with larger deposits can also usually qualify for mortgage loans based on higher income multiples.

If the amount you need to borrow is more than 4.5 times your salary, a mortgage broker can help assess whether you will qualify for higher income multiple from certain lenders.

Try our mortgage affordability calculator below to see what your maximum borrowing looks like based on 4.5 times salary, and how that compares to higher income multiples.

What will affect your borrowing limit?

While 4.5 times annual salary is the standard rule of thumb to use when working out how much you can borrow for a mortgage, it is not guaranteed a lender will offer this multiplier to you. There are other factors to take into account that will affect your borrowing limit. These include:

• Income: Obviously, how much income you receive each year is the main factor in how much you can borrow. Lenders like to see that applicants have regular income based on steady employment. If your income is made up of lots of sources, such as from benefits or renting out property, you can include these in your application, but some lenders may only consider your employment income. If your income is irregular, or you are self-employed, a broker can help you find a lender more suited to your situation.
• Outgoings: This includes your monthly bills and outgoings, plus any other debts, to see how much income you have left over. If your finances are very tight, this could impact the maximum amount you can borrow.

Lenders offset your income against your outgoings to calculate your debt-to-income ratio. There’s no set percentage it needs to be to qualify for a mortgage, though most lenders consider anything over 45% to be on the high side.

Try out debt-to-income calculator below to work out yours.

Eligibility factors

These can have an indirect impact on your borrowing capacity by determining the number of rates and deals that you qualify. For example, if you have certain types of bad credit or a small deposit, you might not pass the eligibility checks at some of the lenders who offer more than 4.5 times salary mortgages.

These factors include…

• Deposit: The larger your house deposit, the better your chances of being offered a high income multiple. If you have a deposit saved worth 20% or 25% of the property’s value, the lender only has to lend you the remaining 75% of the cost of the property, which is a lower risk to them, compared to lending 90% of a property’s value to someone with just a 10% deposit.
• Credit rating: If you have a poor credit history, you’re choices of lenders and deals is likely to be smaller, if you are accepted at all. However, there are specialist lenders who will consider applicants with bad credit. A mortgage expert can help match you to one of these lenders.
• Property type: Lenders prefer to lend against standard properties. If your property is unusual in some way, such as being built from non-standard materials, this may affect whether your application is approved or not.
• Your age: If you are retired or above a certain age, you might not qualify for a mortgage with certain lenders or others might restrict your mortgage term. In fact, some lenders have a strict age limit: for example, Barclays says the maximum age a borrower can be at the end of their mortgage term is 70 – if you’ll be older than this, you would need to provide proof that you can repay the mortgage.

How a broker can help get you a mortgage based on this income multiple

If you need a 4.5 x salary mortgage to afford the house you want, your first step should be to speak to a mortgage broker who has access to the entire market, including lenders you won’t find on the high street.

Some lenders have lending caps set at just 3.5 or 4 times income, and an experienced broker can help you avoid wasting time applying to these lenders. The brokers we work with can help direct you to a lender where you are more likely to qualify for the 4.5 times income multiple and boost your chances of approval.

Our broker-matching service can quickly assess your needs and circumstances and match you with a fully-vetted mortgage expert. Call us today or enquire online to arrange a fee-free, no obligation chat with an advisor.

What types of mortgages can you get?

The main types of residential mortgage you can get based on 4.5 times salary are as follows…

• Capital repayment: Each month you pay a small amount of the borrowed capital back to the lender, plus some interest. This monthly payment can be expensive, but by the end of the mortgage term (which is typically 25 to 30 years) you will have paid off the entire loan. (people own a property outright when they have a mortgage, it is just that the lender has a charge over the property whilst a Mortgage is outstanding!)
• Interest only: You only pay the interest on the loan to the lender each month in your mortgage payment. This is cheaper on a month-to-month basis, but means you aren’t paying off the original loan. At the end of the mortgage term, you’ll be expected to pay back the whole amount of outstanding capital to the lender, either by selling the property, remortgaging, or through some other means in a repayment vehicle.

The other factor to consider is the interest rate on your mortgage. Different lenders have different rates. Some offer fixed rate mortgages, where the interest rate remains the same year over year, while others offer tracker mortgages, where the interest rate “tracks” the base rate set by the Bank of England.

A tracker can be cheaper than a fixed rate, but it will change every time the base rate changes, meaning your bills could be higher from one month to the next, while a fixed rate offers certainty and can make budgeting easier.

What rates and lenders are available?

If you need a 4.5 x salary mortgage, there are many lenders to choose from, including high street names like Metro Bank, HSBC or Virgin. If you’re a higher earner, receiving more than £100,000 a year, HSBC will increase their income multiple to 5.5 times your income.

Currently, HSBC is offering a mortgage with an interest rate of 4.54% fixed for five years to first-time buyers with a 10% deposit.

Speak to a specialist today to help secure your 4.5 times salary mortgage

If you need help finding a lender that will let you borrow 4.5 times your salary, you should speak to a mortgage broker today. The brokers we work with can guide customers through the application process and help you with the paperwork, saving time, as well as helping to find you the best mortgage deal possible to save you money.

Our advisor-matching can pair you with a broker who has exactly the right knowledge and expertise you need. For free chat with no obligation to proceed further, give us a call today on 0808 189 0463 or make an enquiry online.