Bad credit mortgages at 4.5 times income
If your looking to find out What the Income Multiples are for Bad Credit Mortgage products then you have found the right place. Mortgages are risk based, as such if there is a lenience towards bad credit then something else needs to give, normally the trade is a lower income multiple. In this article, I discuss how to maximise the income multiple even if you have bad credit.
The mechanics are quiet boring but the results exciting as you can borrow a greater amount. This could mean you could buy a larger property or debt consolidate more – so I urge you to read on…
Inside Track on Income Multiple Assessment
So you have been naughty and have a legacy of CCJs and defaults. It is not uncommon and I have helped many, many clients like you obtain mortgages with similar bad credit problems.
To the untrained eye you might set about assessing your affordability on a short term fix rate, say 2 years. This is because the rate catches your eye, as generally shorter fixes have lower initial rates. This approach could well suit you but Lenders need to determine affordability over a longer period as under ‘responsible lending governing rules’. So in the case of a 2 year fix they will need to factor in the reversionary rate in their stress test of affordability, however on a 5 year fix they may examine the initial pay-rate.
Example: Borrow more on a 5 year fix rate
John wants to consolidate his debts by way of a remortgage. He has had 1 CCJ and 3 defaults that were registered 3 years ago when he fell on hard times.
Income is £40k gross per annum (£2540pcm). Monthly Expenditure = £1100.
Below is a table to illustrate how the maximum borrowing changes for one Specialist Lender, depending on product selection, who Niche Advice uses regularly:
| Initial pay rate | Fixed period | Stress test affordability test applied to | Maximum loan |
| 2.93% | 30 months | 4.74% (reversionary rate) | £152,000 |
| 3.53% | 60 months | 3.53% (pay rate) | £180,000 |
That’s right using the 5 year fix would mean you could borrow £28,000 more.
Borrow even more on Limited Edition 5 year fix rate
The even better news is Niche Advice has access to a Limited Tranche of 5 year mortgages at 2.88%, so we can help you borrow more still, and at a lower rate!
To borrow the maximum on a bad credit mortgage call T: 020 7993 2044 or complete our online contact form. Niche Advice offers suitable advice for all borrowers, including those with bad credit, furthermore we do NOT charge until the mortgage completes.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines. To get in contact with him please click here.
