Is it possible to borrow 5 X your income? or is it capped at 4.5?

Xxadele92xx

Is it possible to borrow 5 X your income? or is it capped at 4.5? 
I want to move home in 18 months time... but the house I want will be just under the 5 times mark rather than 4.5. Any advice?

K_S

Depends on your annual income and LTV. Generally speaking, the higher the income and lower the LTV, the higher the multiples you can potentially borrow. 

There are mainstream lenders who will consider lending 5x or even 5.5x. A few lenders will even go further if you tick certain boxes ,(professional, etc).

As an example, Virgin will consider lending up to 5x income if (sole or joint) £50k or more and up to 85% LTV. Santander will lend up to 5.5x for 100k+ income up to 60% LTV

MaryNB

I got a DIP from Natwest for 5x my salary but when I went to progress my application they would only give me 4.5x. They couldn't give me any explanation (the adviser herself seemed baffled).

I got 4.75 with Halifax. They will do 5x under certain circumstances. Have a look at the Affordability and Sustainability section.

The higher your salary and lower your LTV the better chance you have (assuming your credit file is in good shape). Probably best of talking to a broker since anything over 4.5 can be tricky.

Xxadele92xx

Yeah its looking like we are going to need a b\specialist broker. Joint income from salaries is £50k, £1,820 child benefit, then £16k income from buy to let properties. The two buy to lets are still mortgaged though... so this MAY make a difference on what we can borrow. Equity of £103,000 and the house I want to buy will be around £420,000. No debt between us. Any ideas anyone?

Xxadele92xx

On a £420,000 house we would have a 25% put down of £105,000. So the amount we would need to borrow would be £315,000. Any one know if its going to be possible? or do I need to keep saving

retepetsir

That sounds a bit tight. Could you sell one of the B2L properties to fund some of the purchase?

Xxadele92xx

Theres 48k equity in the first buy to let and only 30k in the other. I wouldnt want to sell them to move to be honest as im hoping to use the rental income in the future

K_S

@Xxadele92xx If you need to borrow 300k+ with 50k earned income and 2k child benefit, your chances will boil down to how profitable the 2 rentals are and how much of that profit a lender will consider towards affordability. Even then it's likely to be very tight.

You could potentially consider releasing some equity from the BTLs (if the numbers stack up) to reduce the borrowing required.

grumiofoundation

Xxadele92xx said:

On a £420,000 house we would have a 25% put down of £105,000. So the amount we would need to borrow would be £315,000. Any one know if its going to be possible? or do I need to keep saving

Don’t forget stamp duty (assuming England/NI, LLT in wales, LBTT in Scotland). £11k on 420k purchase.