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Mortgage 5 x Salary before of after tax?
icicat
Posts: 243 Forumite
Hi, this may seem obvious though I just want to know for sure, will a lender calculate the 5 x salary before tax? So only what you actually get paid into your account after deductions (income tax, NI)?
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Comments
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4.5 x GROSS salary is what most seem to use as an indicator, but it isn't as simple as that as lenders now look at the overall financial picture in detail, so outgoings, debts, tendency to save, etc.0
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From recent experience, 4.5 x GROSS seems to be the indicator, but this will vary depending on your other commitments, i.e. they will deduct your debt repayments from the gross to give the final multiplier that will be factored into your own unique case.
Having just been through the process, its far more rigorous than the last time I applied back in 2005, and unsurprisingly far more stringent.0 -
It's always gross, but in reality, this is only an INDICATION of what they might lend you. They'll look at your outgoings too."Real knowledge is to know the extent of one's ignorance" - Confucius0
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Some lenders may also place caveats on any offer.
I only borrowed 2X my salary but the lender still insisted i paid off my ( not very substantial ) CC debt.0 -
4.5 x GROSS salary is what most seem to use as an indicator, but it isn't as simple as that as lenders now look at the overall financial picture in detail, so outgoings, debts, tendency to save, etc.
As above, hardly any mortgage lenders use "income multipliers" now.
It is more about affordability (Income and expenditure assessment).Life isn't about the number of breaths we take, but the moments that take our breath away. Like choking....0 -
The AIP myself and my partner got was near enough exactly 4.5X combined salaries (excluding overtime and bonus) as we have no debt and regular saving each month, this may be a coincidence though.
Also we dont want to borrow anywhere near the max that the AIP says as we feel this would put too much pressure on us even if they calculate we can afford it; after all its our finances so our decision!0 -
The AIP myself and my partner got was near enough exactly 4.5X combined salaries (excluding overtime and bonus) as we have no debt and regular saving each month, this may be a coincidence though.
Also we dont want to borrow anywhere near the max that the AIP says as we feel this would put too much pressure on us even if they calculate we can afford it; after all its our finances so our decision!
Same. We were told we could borrow up to 160k, but we also did not want to stretch ourselves too much so have set our budget based on borrowing 145k. We want to be able to enjoy a meal out occasionally and not live like hermits!0 -
Thanks for replys all. So I take it the gross pay is the before tax?0
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Gross pay is before deductions are taken out (tax, NI etc). Net pay is after deductions.0
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Btw is a lender offering you 5x your salary?!0
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