Mortgage Based on 7 Times Salary

It’s not typically possible to get a mortgage at 7 times your salary (or income). As we said earlier, the highest most lenders can go is 6 times your salary (or income).

The only time in which someone may be able to borrow at up to what is technically 7 times their income is when they have numerous high value assets such as painting or properties that they can use as security – most likely with a private bank. This is because private banks don’t use income multiples as a primary factor.

For normal mortgages, lenders place a lot more importance on income multiples. Let us explain how these work.

Basically, when you apply for a mortgage, the lender works out your maximum borrowing using an income multiple, such as 4.5 (note: 4.5 is a commonly used income multiple by many lenders). They multiply the annual income of all applicants by this figure to calculate the maximum amount they will consider lending to you.

For example:

• You earn £50,000 per year
• The lender uses an income multiple of 4.5
• The maximum the lender will consider lending to you is (4.5 x £50,000) = £225,000

Bear in mind that this is not the amount they’ll definitely lend to you (as this depends on other factors). It’s just the maximum amount they could potentially lend to you.

Now, although no mainstream lenders will lend a mortgage at 7 times your income on a normal mortgage, some lenders will consider lending at income multiples higher than 4.5, such as 6x your income.

For example:

• You earn £75,000
• The lender uses an income multiple of 6
• The maximum the lender will consider lending to you is (6 x £75,000) = £450,000

We go into this in more detail in the next section.

At present, no one is technically eligible for a mortgage based on 7x salary as this isn’t a criteria typically used by lenders. The people that can borrow at up to what is technically 7 times their income would often borrow with private banks and have extremely high value assets such as paintings, properties, etc.

It’s unlikely you’ll be deemed eligible for a mortgage based on 6x salary unless you’re a higher earner with an income of £75,000 - £100,000 or have the potential to be high earner as you progress in your profession.

Although it’s not typically possible to obtain a mortgage at 7 times salary, there are steps you can take to give yourself the best chance of borrowing more on a mortgage and securing a better deal.

• Increase your income – of course, increasing your earnings is easier said than done. Nonetheless, it may be worth waiting to take out a mortgage once you’ve secured a raise or have settled into a higher paying role
• Use a mortgage broker like John Charcol – we’re an independent mortgage broker with access to lenders across the market. We know their criteria and how they determine what to lend to you. This means that we can approach lenders such as private banks that can consider different income sources and/or use higher income multiples
• Reduce your outgoings – after working out your maximum borrowing, the lender will consider your monthly outgoings in order to determine what you can afford in mortgage payments. Minimising your outgoings means more of your income can go towards mortgage payments, allowing you to borrow more
• Improve your credit history – the better your credit history, the more reliable a borrower you appear to the lender, and the better the deal they’re able to offer you. Pay off debts, register on the electoral roll and continue to make payments on time to boost your credit score
• Raise a larger deposit – a larger deposit means less risk for the lender, which can improve the terms they’ll offer you
• Take out a mortgage with someone – having a joint borrower means there’s another income to consider, and a joint income can greatly increase the amount you’re able to borrow

Although there are many advantages, it's important to remember that a larger mortgage means considerably higher monthly payments and more interest charged overall.

Pushing your mortgage affordability to its maximum also means that if you have a change in circumstance, you’ll feel the consequence more severely.

Finally, a larger mortgage also requires you to save more for your deposit. You'll need to contribute at least 10% of the overall cost of the home you wish to buy.

Borrowing at a higher income multiple will likely result in larger monthly payments. This is important to bear in mind when considering what you want to borrow as it will greatly impact your monthly disposable income in the long term.

Of course, your mortgage adviser will work out what’s feasible for you, but it’s always a good idea to do some research yourself. You can work out your potential monthly mortgage and interest payments using our mortgage repayment calculator. All you need to know if how much you want to borrow and the kind of interest rate you’re looking at – try our moving home mortgage rates page for current deals.

If you’re owning over £75,000 per year and/or are currently working in one of the professions noted above, have multiple sources of high earning income and/or have a particularly large deposit you may be eligible to borrow at up to 6x your income.

The simplest way to find out what deals are available to you is by calling John Charcol on 0330 433 2927. We’ll be able to review your situation and explain your options.

What’s more, even if you’re not eligible to borrow at a higher income multiple, we can still consider your situation and find you the best deal for your circumstances.