An Income Multiplier is the number by which a mortgage lender will multiply your sole or joint incomes when calculating the maximum amount they are prepared to lend to you.
This multiplier will vary from lender to lender and the figure calculated is subject to adjustment for other factors including the makeup of your income (e.g. how much of your gross income before tax is made up from overtime or discretionary bonuses, etc).
For example, a mortgage lender might usually offer borrowers either 4 x the borrower’s primary salary or 3.5 x the borrower’s joint salaries (in the case of a joint application where both parties have income). These multipliers vary from lender to lender and depend upon personal circumstances.
In addition to the multiplier, other factors that lenders will set and which should be considered by borrowers when considering which lender is most likely to make the offer of a loan include; Type of work, whether full time or part time, other monthly expenses and disposable income, the interest rate and the deposit required.
One lender might be happy with a 5% cash deposit, others might require 30% deposit. In most cases, the larger the deposit the better the terms on offer from a lender.
However, more and more lenders are moving away from this way of calculating applicant’s maximum borrowing and applying a set of affordability rules. This involves taking into account other day to day expenditure and credit commitments. Two applicants on identical salaries can end up with very difference borrowing amounts!
For more details on how much you can expect to be able to borrow and what this will cost you every month contact our mortgage advisers on 01928 507477.
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
5 days ago
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
8 days ago
High street lender, NatWest, have launched a new product to help first-time buyers purchase a property with assistance from a family member or friend to get them on the property ladder sooner.
‘Buy Now, Pay Later’ (BNPL) schemes, such as ‘Klarna’ are short-term loans that allow shoppers to make a purchase, but delay paying for it for an agreed amount of time.
Klarna is one of the most popular BNPL services with 18 million customers in the UK alone, and offers interest-free payment options which is appealing to shoppers. However, does it affect a mortgage application?
14 days ago
We look at how to get the best Buy to Let mortgage rate, what's in store going forward, and options as a landlord with increasing costs.
23 days ago
Throughout this past week, lenders have continued to reduce their mortgage rates giving borrowers in the UK some welcome news following the change in global tariffs under US President, Donald Trump.
23 days ago
Did you know that buying a house, or relocating is in the top 10 most stressful life events?
Stress of course is an unavoidable part of life and there are many reasons why people experience stress, not just buying a house!
There are lots of effective ways to manage and reduce stress, check out our tips to help you.
With the stamp duty relief ending in England and Northern Ireland, we have listed the top 10 cheapest areas for first-time buyers as published by Rightmove.