Getting a Mortgage 5 - 5.5 Times Your Salary

High street lenders have traditionally capped income multiples at 4.5 times your annual salary as a basis for what you may be able to borrow. To help people move up or get onto the property ladder, mortgages with income multiples of 5 or even 5.5 times salary are now available.

In this article you’ll learn who could potentially apply for a mortgage at 5 or 5.5 times salary, what the eligibility criteria is and how a broker can make sure you get the best deal.

Can you get a mortgage at 5.5 times your salary?

Yes, it’s possible. They can be the ideal solution for those who have a substantial deposit and good regular income, but may have previously struggled to reach their borrowing target. They can also help existing homeowners who want to upsize or move to a more desirable area but face a similar barrier.

This additional borrowing capacity can have a significant impact on the type of home you can afford to buy. A couple with a combined income of £80,000 per year using a 5.5 times salary mortgage could borrow up to £440,000 compared with a maximum of £360,000 using a ratio of 4.5.

As each lender will work to their own internal guidelines on how much they’ll allow you to borrow, the smart move from the outset is to speak to a broker with knowledge of which lenders will offer higher income multiples, so they can identify them for you.

Try our mortgage affordability calculator below to work out how much you could borrow based on these income multiples.

What is different about applying for a mortgage over 5 times your salary?

High street lenders tend to see this type of mortgage as reserved for professions such as:

• Lawyers
• Doctors
• Solicitors
• Dentists

A fully-qualified, seasoned professional in a secure industry is considered low risk as the likelihood is they will continue to be employed with a substantial and steady income for years to come. If this is you, then you’re in the group of people most likely to be approved for this type of loan.

For people just starting out in these professions, there are lenders who will agree to 5 or 5.5 times salary (and in some cases more) based on the security of those career paths and the high possibility of significant pay rises in the coming years.

Those in less stable jobs may find it harder to qualify and could find other mortgage products more suited to their circumstances.

Factors that affect borrowing limit

Whilst higher income multiples offer greater borrowing possibilities, they also come with greater risk to lenders. Mortgage providers are legally obliged to lend responsibly and as such, the criteria for these types of mortgages can be stricter than those using more traditional income multiples.

5 times and 5.5 times salary mortgages are predominantly targeted at qualified, highly paid professionals in secure industries and who have an impeccable credit rating.

Each application will be assessed against criteria including:

• Income: In simple terms, the higher your income the more you can borrow. However, some providers insist on a minimum level of income and each has their own way of calculating it. Some only use basic salary, others include a percentage of commissions and bonuses, while there are specialist lenders who will consider all income sources as part of an application.
• Outgoings: As part of their commitment to responsible lending, providers look more closely at your outgoings than with other types of mortgages. If you’re heavily burdened with debt it can affect your capacity to borrow at these income multiples.
• Occupation: As mentioned above, your profession will also play a major part in qualifying for a higher income multiple. If a lender can see you’re in a stable profession this will boost your chances of success.
• Age: Some lenders have maximum age limits and may not be prepared to lend your required amount if you are nearing retirement age unless you can prove affordability from retirement income.

Other eligibility factors

Other variables can in directly affect the amount you can borrow, as they have a bearing on the number of lenders and deals you’d potentially have access to. They include…

• Deposit: Some providers only consider higher income multiples for mortgages with a deposit of at least 25%, but it is possible to borrow at 95% loan to value (LTV) with a strong application and the right lender. If your application doesn’t quite meet the criteria overall, you may be able to use other assets as collateral to get it over the line or ask a family member to stand as guarantor to help boost your deposit.

• Credit: Adverse credit is likely to result in mainstream providers preferring to lend at a lower income multiple. But there are specialist lenders who take a more flexible approach to underwriting and may still approve a 5 or 5.5 times salary mortgage if there is a suitable explanation for credit problems and you can prove to them that affordability will not be an issue.

How a broker can help

Borrowing at higher income multiples will increase your monthly mortgage payments so it is important you make sure you are on the best deal possible. A slightly better interest rate could result in significant savings in the long run.

A broker with experience in this niche and access to the whole of the market will be able to assess all aspects of your application and find the best deal to suit not just your income, but your deposit amount and credit history too.

If you get in touch we can arrange for a broker we work with, who has experience of arranging mortgages using higher income multiples, to contact you straight away for a free, no obligation, chat.

Rates and lenders

High street lenders that offer both 5 times and 5.5 times salary mortgages include:

• Nationwide
• Halifax
• HSBC
• Barclays
• Santander

Other mainstream providers are expected to follow suit and you are always advised to check the entire market (including specialist lenders).

The rates available for a mortgage based on this income multiple are usually the same as they are for deals based on other income multiples. See our guide to mortgage interest rates for information about the latest deals.

Types of mortgages available

As with lower income multiple mortgages, there is a range of options available and which is best for you will depend on your current circumstances and future plans.

Some providers will look to tie you into a fixed rate deal for up to 5 years, while others offer a range of tracker or fixed rate deals which you are tied to for 2 years.

Quoted rates tend to be based on a 25-year mortgage. But, younger borrowers can extend the term of their loan – up to 30 or possibly even 35 years – to take advantage of enhanced income multiples while ensuring monthly payments are manageable.

Some lenders allow for overpayments of up to 10% per year towards the mortgage to help borrowers further improve their position when their fixed term ends. Outside the advertised rate offered by mainstream lenders, many specialist providers have products available exclusively via a broker.

Get matched with a 5.5x income mortgage broker

The brokers we work with have access to the whole of the market and are experienced in helping people maximise their borrowing opportunities. After assessing your circumstances our broker matching service will connect you with the best broker for your needs.

With 5.5x mortgages, it is all about identifying the lenders with eligibility criteria that most closely matches your situation and then comparing rates and terms to see which is most favourable.

Applying alone with no knowledge of this area of lending could result in rejections which will remain on your credit file and further decrease your chances of acceptance with subsequent applications.

Call now on 0808 189 0463 or enquire online to arrange a free no-obligation chat.