Published 13 April 2022 · Last reviewed 13 April 2022 · Older article — see current rates
I never thought I’d be writing about 10 times income multiple for a mortgage.
Looking back income multiples have come a long way to get to 10 times. Initially they were 2.75 to 3 times the Main earners income plus once times the Second applicant’s salary. And then, Bristol and West took this to the heady heights of 3.5 times in the late 90s. Then 2.5 times the recognised joint multiple with the household demographic changing to two established workers. Then Bank of Ireland pushed this to 2.75 times joint for mortgages to 75% loan-to-value. This pushing of the envelope by Bristol and West and Bank of Ireland did not go unnoticed at Board Level as they merged years later.
Enough of the trip down memory lane. We typically find ourselves with a mortgage market that typically sits at 5 times joint income to 85% loan-to-value and 4.5 times for loans 86% to 95% loan-to-value. Within this Help-to-Buy sits at 4.5 times joint income multiple.
There are exceptions to this rule for Applicants in with certain professions or high earners with 5.5 to 6 times joint a real possibility.
Depending on the Lender, this generosity has been extended to lower earning Applicants who are deemed trapped on their current deals (dubbed “mortgage prisoners”) but have proved they can service their mortgage payments. They are looking to remortgage to a better rate without increasing the mortgage balance (or borrowing less) but cannot as the normal affordability rules get in the way. This brings us on the 8 to 10 times income multiple which for this group of customers.
Importantly the 10 times income Lender is a “specialist one” so the rates sit in the second tier behind “high street rates”. So you will probably need to be with another specialist lender to benefit OR seek the reassurance of a fixed rate with rates set to rise.
Specialist Lenders that currently dominate the UK space include: Kensington, Precise, Pepper, The Mortgage Lender (TML), Aldermore, Bluestone, Together, Marsden, Market Harborough, Melton Mowbray (MBS), Darlington, Buckinghamshire, Harpenden, Cambridge, Hinckley & Rugby, Chorley and Vida.
Where the 10 times really comes into its own is where one applicant has lost their job or taking a career break. So what was 5 times joint mortgage originally is now 10 times the remaining earner.
It is important that you talk this through with your Professional Mortgage Broker as 10 times income mortgage requires advice and Lender is not open to the public directly.
2 Year Fixed Products in 10 times income range
5 Year Fixed Products in 10 times income range
They are better rates for properties with A to C energy efficiency ratings.
Frequently asked questions on the 10 times income mortgage.
[toggle title=”Q) Is the 10 times income multiple mortgage open to purchases?”] A) You might think with this level of lending and entrepreneurship it might be A) No, straight balance swap remortgages only.[/toggle]
[toggle title=”Q) Can I increase my mortgage balance?”] A) No, you cannot and you also must have maintained your current mortgage perfectly for the last 2 years. You could however reduce the balance if you wish.[/toggle]
[toggle title=”Q) Is the 10 times income mortgage always ten times income?”] A) No, it’s the maximum. It normally ranges between 8 to 10 times income which is still a long way ahead of the industry alternatives.[/toggle]
[toggle title=”Q) Is the 10 times income mortgage limited to basic salary?”] A) No, but additional features of income such as overtime, commission, allowances and bonuses might be limited to half in the equation.[/toggle]
[toggle title=”Q) Is there a minimum income to qualify for the 10 times income plan?”] A) No.[/toggle]
[toggle title=”Q) Can you have more than one job?”] A) Yes, you will need a three month track record of the main and second jobs being run side-by-side. This would probably be extended to 6 months if one of the jobs is with family..[/toggle]
[toggle title=”Q) I have rental income can that be included in the 10 times income mortgage calculation?”] A) Yes, it would be worked on the profit shown of your self-assessment and not the gross monthly rent received.[/toggle]
[toggle title=”Q) How long can I take the mortgage over?”] A) The maximum term is determined against the eldest applicant’s age. The shorter the term the lower borrowing potential.[/toggle]
[toggle title=”Q) Can I borrow more on interest only?”] A) Yes, but not beyond 10 times income. You would also need at least £200,000 equity in the property to qualify for interest only.[/toggle]
[toggle title=”Q) My credit conduct is not perfect do I still qualify for the 10 times income multiple mortgage?”] A) Your current mortgage must have been maintained without problems as this is the main underwriting factor for allowing 10 times income. Defaults need to have been registered at least two years and cleared before application. Any other problems need to be discussed with your Mortgage Broker.[/toggle]
[toggle title=”Q) I’m a daily rate contractor how will my income be assessed?”] A) Daily rate X 5 (days in a week) X 46 (weeks allows for holiday) X income multiple.[/toggle]
[toggle title=”Q) I’m a sole trader how is my income assessed?”] A) Standard way is an average of the last two years not profits. It may be possible to work off the latest year with a good rationale and Accountant’s projection for the coming year.[/toggle]
[toggle title=”Q) I’m a shareholding Company Director how is my income worked out?”] A) Standard way is an average of the last two years net profits. It may be possible to work off the latest year with a good rationale and Accountant’s projection for the coming year.[/toggle]
[toggle title=”Q) Is the 10 times income multiple open to any occupation?”] A) Yes, any profession where taxes are paid.[/toggle]
NOTES
* Rates as at 13/4/2022.
* Figures produced using Twenty7tec software.
* True Cost factors in the interest rate, mortgage set-up costs and any cashback rebates. It assumes the product fee is paid and is no greater than £2,500.
* The comparison is based on an assumed purchase price of £300,000 over a 25 year mortgage term.
* It looks at repayment method is capital and interest.
* Eligibility will depend on your own personal circumstances.
Health Warning
Your Property is at Risk if you do not keep up with your mortgage repayments.
Niche Advice arranges mortgages and is not a Lender.