Published 22 January 2024 · Last reviewed 1 May 2026

A Game-Changing Mortgage Option: Understanding Enhanced Income Formula Rules

There could be a multitude of reasons why you took out a second charge secure loan but if this was meant to be a “stop-gap” and now you find yourself in the position where a remortgage seems impossible due to affordability the Enhanced Income Formula Mortgage Product to help you Remortgage to Clear Your Second Charge could be the answer!

Affordability and Loan-to-income Cap
The generosity of an affordability assessment is one of the main ways the UK Mortgage Lenders compete for business. We ourselves have a specialist tool in-house that references  over 45* (*number at the time of print) Mortgage Lenders calculations in a matter of minutes, however the underlying formula they all use is fundamentally similar – it looks at monthly income versus expenses, and then applies an “over-arching cap” to limit the outcome to a multiple of income. This cap is typically 4 to 5.5 times income. 

Well, one Mortgage Lender has stepped outside the box and has “removed the cap” completely in a considered way. The net result is Enhanced Income Formula Mortgage Product has produced outcomes of up 8.5 times in the past. This could really help people looking to Remortgage to Clear Your Second Charge.

So what’s the catch? The new mortgage balance must match (or be lower) that your current combined first and second charges. For example, you have a first charge mortgage with Santander £150,000 and a second charge secured loan with Together for £50,000, the mortgage on the Enhanced Income Formula Mortgage Product cannot be greater than £200,000.

Let’s face it if you are managing the ins-and-outs on a monthly basis who is a Mortgage Lender to tell you can’t? And, of course a good Mortgage Broker will be intent on putting in a better position than you are currently.

Rates on the Enhanced Income Formula Mortgage Product
The Enhanced Income Formula Mortgage Product is NOT for everyone if you can make the income work with a “mainstream lender” you should, and we can still help if required.

The Enhanced Income Formula Mortgage Product is for applicants who are “stuck” on high second charge secured loan rates, and even then if the bulk of the mortgage is on a good first charge rate it might not be prudent.

There may also be a spectrum of products in-between a “mainstream lender” and the Enhanced Income Formula Mortgage Product – is article concentrates on these polar opposites.

In all instances your mortgage product choice should be discussed with your professional Mortgage Broker as it will be individual to your own circumstances.

By “equity” in the property we refer to the percentage difference between the mortgage and the property value. For example if your property was worth £100,000 and the mortgage is £85,000 this would be 15% equity otherwise expressed as 85% loan-to-value.

Equity in the property	Halifax	NatWest	Enhanced Income Formula Mortgage Product
15% equity	5.46% (APR 8.4)	5.34% (APR 8.0)	7.29% (APR 10.1)
20% equity	5.41% (APR 8.4)	5.29% (APR 8.0)	7.09% (APR 10.1)
25% equity	4.81% (APR 8.3)	4.64% (APR 7.8)	6.89% (APR 10.1)
40% equity	4.68% (APR 8.3)	4.44% (APR 7.8)	6.69% (APR 10.0)

Table as at 20/1/24. APR based on a £300,000 property value. Repayment mortgage over 25 years. It Includes product rate enhancements for “green” properties, professionals or key workers. Property in England or Wales.

Accessing the Enhanced Income Formula Mortgage Product
This is NOT the easiest product to get hold of. Firstly, you must use a professional Mortgage Broker as the Enhanced Income Formula Mortgage Product is NOT available directly to the consumer.

The other barrier is you must research and choose a professional Mortgage Broker than has the permissions to consolidate second charge secured loans, such as Niche Advice. There are Mortgage Brokers that have specific restrictions on their activities by their Networks.

Frequently Asked Questions on Enhanced Income Formula Mortgage Product

[toggle title=” Is the Enhanced Income Formula Mortgage Product only open to customers wishing to consolidate second charge secured loans?”] A) No, but it’s unlikely to be cost effective unless your first charge mortgage is on a high interest as remember you are limited to a straight mortgage balance swap.[/toggle]

[toggle title=” How much can actually I borrow if I want to Remortgage to Clear Your Second Charge?”]
This will need to be worked out by your professional Mortgage Broker but importantly there is no income multiple restrictions / loan-to-income cap.[/toggle]

[toggle title=”How can gain access the Enhanced Income Formula Mortgage Product?”]
Via a Mortgage Broker who does not have restrictions on consolidation mortgages, such as Niche Advice.[/toggle]

[toggle title=” Why are the interest rates higher than normal on the Enhanced Income Formula Mortgage Product?”]
Mortgages are calculated on “risk” basis. The premium is to reflect the removal of the loan-to-income cap.[/toggle]

[toggle title=” Is there a legal process to go through?”] Yes, like most remortgages there is a legal process and cost.

[toggle title=” I can overpay on my second charge secured loan – can I do the same on the Enhanced Income Formula Mortgage Product?”] Currently the Enhanced Income Formula Mortgage Product has the option to overpay up to 10% of the outstanding mortgage balance in a year without main early repayment charges applying.
Often, second charge secured loans allow overpayments without restrictions but you will need to look at your own individual contract. Just to add it is nearly always advisable to pay down your debts quicker so if 10% creates a barrier stopping this happening the Enhanced Income Formula Mortgage Product is unlikely to be suitable.[/toggle]

[toggle title=”My second charge secured loan is over 15 years and my mortgage is 25 years, can I split the term to stay the same on the Enhanced Income Formula Mortgage Product?”] No, the mortgage only has the option to have one term.[/toggle]

[toggle title=”My second charge secured loan is on an “interest only” basis can what is the basis of the Enhanced Income Formula Mortgage Product?”] The maximums are:  100% repayment if the property has 15% equity; part repayment and interest only to 20% equity; 100% interest only 30% equity.[/toggle]

[toggle title=”Is the Enhanced Income Formula Mortgage Product formula more generous on “interest only” loans?”]
Yes, but you must have a plan to repay the debt and this needs to be fully discussed with your professional Mortgage Broker.[/toggle]

[toggle title=” Is the Enhanced Income Formula Mortgage Product open to applicants with credit issues?”]
Individual cases will need to be discussed, but as a guide:
     – CCJs and Defaults issues need to be 6 months to 3 years behind you depending on the amount of equity you have in the property, and normally satisfied.
     – Mortgage Arrears need to be 2 years old.
     – Missed payments on unsecured credit worst status “2 or 3”.
     – Bankruptcy satisfied 3 years and minimum 25% equity.
    –  Debt management plans well conducted for 12 months.
     – Repossession are unacceptable.[/toggle]

[toggle title=”Is the Enhanced Income Formula Mortgage Product formula open to buy-to-lets?”]
No, this product is designed to help out with affordability on properties you live in.[/toggle]

If you want to remortgage to clear your second charge, please get in contact.