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
| Minimum value in your property | 40% equity | 25% equity | 20% equity |
| Initial rate | 2.99 % | 3.09% | 3.34% |
| Subsequent reversionary rate | 5.74% | 5.74% | 5.74% |
| The total amount you must pay back, including the amount borrowed is | £329,800.24 | £411,841.12 | £440,657.32 |
| Overall cost of comparison APRC | 5.5% | 5.5% | 5.5% |
| Type and initial benefit period | Fixed rate for 2 years | Fixed rate for 2 years | Fixed rate for 2 years |
| Minimum equity | 40% | 25% | 20% |
| Lender valuation fee | £330 | £330 | £330 |
| Lender booking fee | £125 | £125 | £125 |
| Lender product fee | £1,295 | £1,295 | £1,295 |
| Cashback from the Lender | £Nil | £Nil | £Nil |
| Basic legal costs | Payable | Payable | Payable |
| Our broker fee charge | From £499 | From £499 | From £499 |
5 Year Fixed Products in 10 times income range
| Minimum value in your property | 25% equity | 20% equity | 10% equity |
| Initial rate | 3.49 % | 3.54% | 4.84% |
| Subsequent reversionary rate | 5.74% | 5.74% | 5.74% |
| The total amount you must pay back, including the amount borrowed is | £396,881.20 | £423,886.60 | £496,271.60 |
| Overall cost of comparison APRC | 5.0% | 5.0% | 5.5% |
| Type and initial benefit period | Fixed rate for 5 years | Fixed rate for 5 years | Fixed rate for 5 years |
| Minimum equity | 25% | 20% | 10% |
| Lender valuation fee | £330 | £330 | £330 |
| Lender booking fee | £125 | £125 | £125 |
| Lender product fee | £995 | £995 | £Nil |
| Cashback from the Lender | £Nil | £Nil | £Nil |
| Basic legal costs | Payable | Payable | Payable |
| Our broker fee charge | From £499 | From £499 | From £499 |
They are better rates for properties with A to C energy efficiency ratings.
Frequently asked questions on the 10 times income mortgage.
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.
