Understanding Mortgage Income Multiples in the UK

New to mortgages? The term “income multiple” might sound confusing. 

But it’s simple.

Your income multiple is how lenders decide how much you can borrow based on your salary. 

Whether you’re buying your first home or just curious about how much you can borrow, understanding income multiples is the first step.

In this article, we’ll explain everything you need to know, from what income multiples are to how they’re calculated, and how you can borrow as much as possible.

What Are Mortgage Income Multiples?

Mortgage income multiples, or mortgage multipliers, are a simple way for lenders to estimate how much you can borrow based on your annual income. 

Essentially, the lender will multiply your income by a set figure—this is the income multiplier—to determine the maximum amount they’re willing to lend you.

For example, if your annual income is £40,000 and the lender uses a mortgage multiplier of 4, you could potentially borrow up to £160,000 (4 x £40,000).

How Do Lenders Decide on Your Mortgage Income Multiple?

In the UK, lenders usually offer a mortgage of 3 to 5 times your income. 

But, in some cases, you could get up to 6 times your salary, especially if you’re a professional like a doctor, lawyer, or accountant.

These higher multiples come with stricter requirements. The exact multiple you’re offered will depend on factors like:

• Your income
• Your credit score
• Your existing debts and financial commitments
• The size of your deposit
• The lender’s own criteria

Remember, while income multiples give you a rough idea, lenders will also look at your overall financial situation to assess affordability.

Factors Affecting Mortgage Income Multiples in the UK

As discussed, several elements can influence the mortgage multiplier a lender is willing to offer. Here’s a closer look:

1. Income Level – Higher earners might qualify for higher income multiples. For instance, some lenders may offer a 5.5 or even 6 times income mortgage if your salary exceeds a certain threshold, like £75,000 per year.
2. Credit History – A strong credit score can work in your favour, leading to a higher income multiple. Conversely, a poor credit history might result in a lower multiplier or even mortgage denial.
3. Existing Debt – Lenders will look at your existing financial obligations, such as credit card debt, personal loans, and car finance, when determining your mortgage affordability.
4. Deposit Size – A larger deposit often means a lower loan-to-value (LTV) ratio, which can make lenders more comfortable offering a higher multiple.
5. Employment Type – Lenders may treat different types of employment differently. For example, if you’re self-employed or the director of a limited company, the way your income is assessed might affect your mortgage multiple.
6. Property Type – The type of property you’re looking to buy can also play a role. Non-standard construction homes, leasehold properties with short leases, or properties in poor condition might affect the lender’s willingness to offer a higher multiple.

Example of Mortgage Income Multiples

Let’s look at some examples to see how income multiples work in practice:

Annual Income	3x Income	4x Income	5x Income	6x Income
£20,000	£60,000	£80,000	£100,000	£120,000
£30,000	£90,000	£120,000	£150,000	£180,000
£40,000	£120,000	£160,000	£200,000	£240,000
£50,000	£150,000	£200,000	£250,000	£300,000
£60,000	£180,000	£240,000	£300,000	£360,000

This table provides a rough estimate of how much you could borrow based on different income levels and multipliers. 

But, remember that your actual borrowing limit will depend on your individual circumstances and the lender’s criteria.

Try our mortgage affordability calculator to see an exact estimate of your mortgage amount based on your income.

Does All Your Income Count Towards a Mortgage?

Not all income is treated the same when it comes to mortgage applications. 

While your basic salary is always considered, other sources of income like bonuses, overtime, and benefits may only be partially included, or not at all.

Here’s how lenders typically assess different types of income:

• Basic Salary (100% considered). This is your main income, and lenders will count all of it.
• Bonuses and Overtime (50% to 100% considered). Lenders might average your bonuses and overtime over the last 3 to 12 months (or longer). They may only count a portion of this income, especially if it’s irregular or not guaranteed. But, if your bonuses or overtime are consistent and guaranteed, some lenders might consider the full amount.
• Commission (0% to 100% considered). Commission is treated like bonuses. If it’s regular, you could get up to 100% counted, but if not, it might be less.
• Self-Employment Income (100% considered). Lenders typically consider your net profit or salary and dividends, averaged over 2 to 3 years.
• Pension Income (100% considered). If you’re retired, your pension income is generally fully considered. Whether it’s a state pension, private pension, or annuity, lenders typically take 100% into account, especially if it’s guaranteed income.
• Rental Income (50% to 75% considered). If you have rental properties, lenders might count 50% to 75% of your net rental income after expenses. They’ll also check if this income can cover your mortgage if rates go up.
• Benefits and Tax Credits (0% to 100% considered). Benefits like child benefit or tax credits might be considered, but this varies widely. You might get 100% counted, or sometimes only a portion.
• Investment Income (0% to 100% considered). Income from investments like dividends or interest might be included, but lenders are cautious due to its variability. They might consider a portion, often averaged over several years, to account for fluctuations.

High Multiple Mortgages: Are They Right for You?

High multiple mortgages can be appealing, especially if you’re looking to buy in a competitive market or want to increase your purchasing power. 

But, it’s important to THINK carefully about the risks. 🤔

Borrowing more means higher monthly repayments, so you need to be sure you can afford them, not just now, but in the future too—especially if interest rates go up.

Before deciding on a high multiple mortgage, consider these points:

• Affordability: Ensure the mortgage fits your budget, both now and in the future.
• Interest Rates: Remember, if rates rise, your repayments will too.
• Long-Term Financial Health: Borrowing more could strain your finances over time. Think about how this fits with your other goals, like saving for retirement or emergencies.

How Can You Get a Higher Mortgage Income Multiple?

If you want to borrow more, here are some simple ways to increase your mortgage income multiple:

1. Increase Your Deposit. As we’ve talked about, a larger deposit can lower the lender’s risk, which might help you secure a higher income multiple.
2. Improve Your Credit Score. A higher credit score can lead to better mortgage terms, including a higher income multiple.
3. Consider Joint Applications. Applying with a partner or spouse can boost the total amount you can borrow since lenders may combine your incomes.
4. Explore Professional Mortgages. If you’re in a profession like medicine, law, or accountancy, you might qualify for higher income multiples. Some lenders offer special deals for these careers.
5. Use a Mortgage Broker. A good mortgage broker can help you find lenders that offer higher income multiples. They often have access to deals that you can’t get directly and can guide you through the mortgage process.

Can Mortgage Brokers Get You a Bigger Mortgage?

Yes, mortgage brokers can often help you secure a bigger mortgage than you might be able to get on your own. 

They do this by assessing your full financial picture—including any supplemental income like bonuses, overtime, or rental income—and matching you with lenders who are willing to offer higher income multiples.

For instance, if you’re a high earner or work in a profession that qualifies for a higher mortgage income multiple, a broker can guide you to lenders who specialises in these types of mortgages.

The Bottom Line

Mortgage income multiples are important, but they’re just one part of the picture. Your credit score, deposit size, and job status also play a big role in how much you can borrow.

With so many factors to consider, the process can feel overwhelming. This is where a whole-of-market mortgage broker can really help:

• They have access to a wide range of lenders, including deals you can’t find on your own.
• They’ll look at your entire financial situation to find the best mortgage for you.
• They make the application process easier, saving you time and reducing stress.

If you want to save time and avoid the hassle, get in touch with us. We’ll connect you with a trusted broker who can help with your mortgage needs.