Lending multiples

chewmylegoff

Couldn't see any other threads on this but apologies if this has been done before.

We are looking to buy somewhere in outer London / Home Counties in the next year or so, and initially I am just trying to work out how much we are likely to be able to borrow. I have put our earnings into a few online calculators and get e.g. First Direct saying that we could borrow up to 4.5x joint income.

I just wanted to know whether this is actually achievable in practice - whether mortgage brokers are actually seeing that sort of lending at the moment. I'm just looking for a high level indicative view, I understand that it will entirely depend on individual circumstances and affordability (and to that end I will go and see a mortgage broker next week).

If relevant here is a bit of basic info - combined basic salaries are 120k, we have a deposit of 250k, and no debts or other financial commitments, we don't have children or other dependents.

kingstreet

High-scoring, low loan to value borrowers will achieve upto five times joint incomes, less any credit commitments or fixed outgoings with more than twelve months to run.

For example, a £500 per month loan would see £6,000 deducted from income, reducing maximum borrowing by £30k. Credit card balances can see you "taxed" as much as 5% of the balance each month, so a £15k card balance would impact borrowing by as much as £45k.

ACG

I remember one lender sending an email out last week saying they managed nearly 7x income - due to their circumstances.

Between 4-5x is achievable, but as you have said it comes down to affordability - you could have a £50k loan to service in which case you would be looking at a lot less.

ValHaller

Age is also a factor. Don't want to assume anything.

If you are likely to have 25 years employment ahead, then you are likely to get the full multiplier. But it could be cut down as your time to go decreases.

chewmylegoff

Thanks for all the replies, very helpful.

We are 33 and 34. No debts at all, credit card is cleared every month and we haven't got any HP or anything like that so hopefully should be a reasonably straightforward process. Even pension is non-contributory so doesn't restrict income.

I do also get a bonus, which has been 20% of gross each year for the last 5 years, but it is non-contractual so assume this wont be taken into account at all?

kingstreet

You'll probably get half taken into account and added to basic.