Salary Multiples..

Steve1988T

Hi All,

FTB here, interested to know peoples thoughts on the likelihood getting a 4.5 salary multiple mortgage offer in the current environment..?

earn approx £43k, no debt (except student loan)  and use my credit card monthly only to pay for groceries; with the balance paid off on full each month .

Ive done one AIP with L&C which got me the 4.5 salary multiple (£195K) however a second AIP with Halifax only got me £158K, which is concerning..

Appreciate any insight..

jamielutz1987

43k PAYE basic income, no debt, no dependents, clean credit history, no other major outgoings, I would be VERY surprised if any half-decent broker couldn't get you 4.5x your income.

If it's the L&C MIP you're taking about it isn't very useful as all they do is apply a standard multiple and print a certificate, no soft check.

The Halifax AIP amount is more concerning but only as good as what you input in it. Did the broker do it or yourself?

Steve1988T

jamielutz1987 said:

43k PAYE basic income, no debt, no dependents, clean credit history, no other major outgoings, I would be VERY surprised if any half-decent broker couldn't get you 4.5x your income.

If it's the L&C MIP you're taking about it isn't very useful as all they do is apply a standard multiple and print a certificate, no soft check.

The Halifax AIP amount is more concerning but only as good as what you input in it. Did the broker do it or yourself?

Correct, no other debt,dependant or even car to pay for. My monthly expenses (food, social and fixed costs such as rent/bills) comes in at approx £1,200 p/m. Monthly salary brings £2,517. Some other ad-hoc spending in there like everyone else

it was me that done the Halifax AIP. Interesting, I done a Halifax AIP over a year ago when I was on around £34k and the amount offered was somewhere in the region of £160..! More than I can Get on the currents £43k salary.

my credit score is sitting at around the 850 mark (good territory). though i did notice my electoral roll details aren’t alligned to my current address so it’ll be another couple of weeks before that change is in place 

I have been put in touch with a mortgage broker via a friend, waiting back for the intro call - my critical question for the broker will be “can you find me a 4.5 salary mortgage ...?” Is this realistic..? 

jamielutz1987

@steve1988T I'm not a broker myself but afaik this is how it works.

If you check on the Halifax affordability calculator for 43k income, no debt, no dependents, 90% LTV or less, etc, it says you may be able to borrow 204,250 which is 4.75x. And this starts going down only once you go above a £500/month student loan repayment (do you pay more than that?)

Assuming there aren't any issues (credit history issues, undisclosed debt, etc) in the background, when you then do a Halifax DIP it should then return the same amount as max borrowing.

At least this is how our broker explained it to us.

So to answer your question, yes, banks are still lending multiples of 4.5x and upwards assuming other eligibility criteria are met.

However, the fact that the Halifax DIP that you did is returning less indicates that there might be other issues in the background that you are not aware of. Or else you have input the numbers wrong in the DIP form. Do not include the current rent as outgoings, only use the outgoings that will remain after you get a mortgage.

NatalieAGC

the Halifax dip amount will be based on your soft check I think, hence more accurate.  if your 'score' is Experian and 850 I think it comes under 'fair', once its in good bracket you may find it will increase your dip figure. 

you will need to check all credit files also, I think Halifax may use Equifax also. 

Steve1988T

jamielutz1987 said:

@steve1988T I'm not a broker myself but afaik this is how it works.

If you check on the Halifax affordability calculator for 43k income, no debt, no dependents, 90% LTV or less, etc, it says you may be able to borrow 204,250 which is 4.75x. And this starts going down only once you go above a £500/month student loan repayment (do you pay more than that?)

Assuming there aren't any issues (credit history issues, undisclosed debt, etc) in the background, when you then do a Halifax DIP it should then return the same amount as max borrowing.

At least this is how our broker explained it to us.

So to answer your question, yes, banks are still lending multiples of 4.5x and upwards assuming other eligibility criteria are met.

However, the fact that the Halifax DIP that you did is returning less indicates that there might be other issues in the background that you are not aware of. Or else you have input the numbers wrong in the affordability calculator. Do not include the current rent as outgoings, only use the outgoings that will remain after you get a mortgage.

Appreciated! No, student loan payments are only about £200 p/m

I use the Money Saving Expert credit score but on this there is no mention of credit history issues and/or undisclosed debt... should it mention it if there is? 

Undisclosed debt... Would this be debt I don't know about? I can't even think of a situation this would impact me... last time I had "credit issues" (overdraft/unpaid phone bills) was in uni about 10 years ago...! Would the AIP Check go back that far?

Is there any way I can do a more thorough look into what's causing this? Would Halifax be able to let me know...?

Appreciated

Steve1988T

NatalieAGC said:

the Halifax dip amount will be based on your soft check I think, hence more accurate.  if your 'score' is Experian and 850 I think it comes under 'fair', once its in good bracket you may find it will increase your dip figure. 

you will need to check all credit files also, I think Halifax may use Equifax also. 

Thank you. Just checked my credit score and it's at 925 (Good)
So, sound like lenders use different credit rating agencies (ie Equifax)

Do you recommend I sign up to them..?

grumiofoundation

Steve1988T said:

NatalieAGC said:

the Halifax dip amount will be based on your soft check I think, hence more accurate.  if your 'score' is Experian and 850 I think it comes under 'fair', once its in good bracket you may find it will increase your dip figure. 

you will need to check all credit files also, I think Halifax may use Equifax also. 

Thank you. Just checked my credit score and it's at 925 (Good)
So, sound like lenders use different credit rating agencies (ie Equifax)

Do you recommend I sign up to them..?

Certainly should check credit report with all 3 credit agencies. 

jamielutz1987

Steve1988T said:

Appreciated! No, student loan payments are only about £200 p/m
I use the Money Saving Expert credit score but on this there is no mention of credit history issues and/or undisclosed debt... should it mention it if there is?
Undisclosed debt... Would this be debt I don't know about? I can't even think of a situation this would impact me... last time I had "credit issues" (overdraft/unpaid phone bills) was in uni about 10 years ago...! Would the AIP Check go back that far?
Is there any way I can do a more thorough look into what's causing this? Would Halifax be able to let me know...?
Appreciated

@Steve1988T Use the exact same details that you put in the DIP and put it in the affordability calculator here.What borrowing figure do you get?

The credit history that the DIP looks at will not go beyond 6 years.

To have a more thorough look, get your statutory credit reports from Experian, Equifax and Transunion and pore over your history to see if there are any issues you aren't aware of. Halifax is unlikely to help you in this regard.

Steve1988T

jamielutz1987 said:

Steve1988T said:

Appreciated! No, student loan payments are only about £200 p/m
I use the Money Saving Expert credit score but on this there is no mention of credit history issues and/or undisclosed debt... should it mention it if there is?
Undisclosed debt... Would this be debt I don't know about? I can't even think of a situation this would impact me... last time I had "credit issues" (overdraft/unpaid phone bills) was in uni about 10 years ago...! Would the AIP Check go back that far?
Is there any way I can do a more thorough look into what's causing this? Would Halifax be able to let me know...?
Appreciated

@Steve1988T Use the exact same details that you put in the DIP and put it in the affordability calculator here.What borrowing figure do you get?

The credit history that the DIP looks at will not go beyond 6 years.

To have a more thorough look, get your statutory credit reports from Experian, Equifax and Transunion and pore over your history to see if there are any issues you aren't aware of. Halifax is unlikely to help you in this regard.

Ok, So I got the £204K figure using that link.

I've just signed up ti Equifax and completed. Score came out at 431 (Good). There was one warning under the Electoral Register which i stated at the top of the initial post here, I sent away for this change and should take about 10 days to change....

jamielutz1987

Steve1988T said:

Ok, So I got the £204K figure using that link.

I've just signed up ti Equifax and completed. Score came out at 431 (Good). There was one warning under the Electoral Register which i stated at the top of the initial post here, I sent away for this change and should take about 10 days to change....

@steve1988T The Electoral Register not matching current address can lead to a DIP being referred (ie request for more information) but (afaik) not a reduced borrowing figure.

I myself never do DIPs (leave it to the broker), but since you aren't averse to it, you may as well try another mainstream lender soft-check DIP (at no more than 85% LTV) such as the Santander one https://www.santander.co.uk/personal/mortgages/get-a-decision-in-principle

If that also returns an unexpectedly low borrowing multiple (less than 3.95x for 85% LTV and 4.45x for 80% LTV and below), you can be more certain that there's something in the background that you may be missing.