Information on 6 times income mortgage – outside the M25 area
Avid followers of Niche Advice will be familiar with our access to 6 times income mortgages.
As a popular Central London broker we are often asked for higher income multiple mortgages in London to counteract soaring house prices. We of course have solutions for this scenario; but we also operate nationally and this latest funding line is focused on properties outside of the M25.
It is therefore with great pleasure that we announce access to a new funder for incomes over £50,000.
That’s right providing the main applicant earns £50,000 than the lender’s standard position is to lend 6 times ‘gross annual income.’
Gross annual income includes basic annual salary and can also include 100% guaranteed overtime, shift allowance or bonuses. In addition, up to 50% regular overtime, shift allowance or bonuses may also be taken into account.
Financial commitments must be deducted from the gross annual income before the multiplier is applied. Where any financial commitments have less than six months remaining they may be ignored.
How Does The 6 Times Income Mortgage Work?
Mr and Mrs Smith are employed. Mr Smith has a basic salary of £50,000 and a £10,000 regular bonus. Mrs Smith works part-time on £7,500. They have two loans: i) Car loan of £150 per month (£1,800 per annum) with 3 years to run; ii) Sofa hire purchase £99 per month with 5 months to run.
ANSWER ON WHAT THEY CAN BORROW:
Stage 1: Check to see if the main earner, earns £50,000 net of commitments.
£48,000 plus £4,000 (half the bonus) less £1,800 (car loan) = £50,200 (over £50,000 minimum).
The sofa loan is ignored from this calculation as it has less than 6 months to run.
Stage 2: Maximum they can borrow
Mr Smith £50,200 + Mrs Smith £7,500 = £57,700 x 6 = £346,200.
Current 6 times income mortgage products from this lender
Based on a purchase price of £400,000 and a repayment mortgage of £340,000 over 25 years.
There is a telegraphic transfer fee of £25. Sealing fee £65, Redemption Statement Fee £25 and Deeds Release Fee £35 on full redemption. The main early repayment charges are 3% of the amount repaid in the first 2 years.
Mortgage products below are current as at 27 May 2014:
Product One: 2 Year Discount
Initial pay rate 2.79% (APR 4.8)
Valuation Fee £395 / Arrangement fee £1,360
Currently at £1,575.43 per month until 30/06/2016. After this period the mortgage will revert to the lender’s variable rate at the time. Based on today’s prices this would be £1,956.70 per month.
Product Two: 3 Year Fixed Rate
Initial pay rate 3.24% (APR 4.7)
Valuation Fee £395 / Arrangement fee £99
Fixed at £1,655.08 per month until 30/06/2017. After this period the mortgage will revert to the lender’s variable rate at the time. Based on today’s prices this would be £1,951.19 per month.
This lender does not use a computer based credit score – all cases are individually underwritten. This is wonderful news as often high income multiple lenders only flex to 6 times for very high scoring clients.
The three year fix has low fees.
Inside the M25 is excluded and arguably there is more need there. The lender only tends to like lending against houses.
- Perfect credit history
- Purchase or remortgage
- Open to Right-to-Buy applicants
- Houses (please refer flats)
- Minimum deposit 15%
- Maximum loan £350,000
For more information on getting 6 times income mortgage please complete the Contact Form to the right hand side of this article or call T: 020 993 2044.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.
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.