How to secure a mortgage based on 6 times income

March 27, 2021
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Mortgages of up to 6 times an individual's income started to appear around 2011. This was at a time where interest rates were at historically low levels, meaning that mortgages of this size were more affordable than ever before. This type of mortgage could even be more affordable than a mortgage offered at 3 times annual income which was standard in the 80s and 90s.

There is still a strong appetite for this type of mortgage as interest rates remain low and the housing market is booming. The good news is that 6 times income mortgages are available for single and joint applicants. Employed and self-employed applicants are also considered, although the latter will need multiple years of accounts.

Since the Mortgage Market Review (MMR) which followed the 2008 financial crash, lenders now have to place more emphasis on the role of dependents in your life. This includes children and parents who may be living with you. This is to ensure mortgages are affordable, particularly when looking at such high levels of borrowing. Having just one dependent on your application could reduce the maximum borrowing to 5.5 times annual income.

When looking for a high multiple mortgages, it’s vital to seek expert advice. As with any large financial decision, you need to be sure you are getting the best possible deal. Rates will rise again and this could have a significant impact on your ability to afford your mortgage. This is why we recommend working with Niche Mortgage Info to find a broker that will help you to secure the best possible deal.

What factors will help you to secure a 6 times income mortgage?

Lenders are often flexible in their approach. So if your application is presented in the correct light, they will be more inclined to consider your application. When going through the underwriting process, lenders might be inclined to allow one weaker aspect of your application to pass if you are in good standing in other areas.

While an application on £15,000 per year won’t be viewed as favourably as an application on £25,000 per year, there are other factors to consider. For example, a worker at the start of their career can anticipate a bigger increase in their earnings than someone nearing retirement.

What’s important is the positioning and the conversation between your broker and the lender. They will be able to highlight the key aspects of the application which make you a stronger candidate.

What times of income can I include in my application?

When completing your mortgage application, you may include the following income sources:

  • Your basic salary
  • The net profits from self-employed or sole trader work
  • Salary and dividends for director of a limited company
  • Your pension and annuities
  • Income from a second job
  • London weighting or a large town allowance
  • Bonuses, overtime and commission provided it is regular
  • Shift allowance or car allowance
  • Mortgage subsidy or housing allowance
  • Family business employment
  • Short term and long term working contracts with a history of renewal
  • Maintenance
  • Fostering income
  • Excess income from rental properties

You could also include child benefit and working tax credits, but having dependents will reduce the chance of securing a 6 times income mortgage.

Can I secure a 6 times income mortgage with bad credit?

No, a lender would want to see a strong credit history with no missed payments, defaults or CCJs.

Can I get a 6 times income mortgage when I have recently changed jobs?

This will depend on your employment status. If you are a contract worker and have a history of contract renewals, this shouldn’t be a problem for the lender. Likewise, if you have recently started working as an employee and you do not have to complete a probationary period. If you have recently started self-employment, this will rule you out from most mortgage applications.

What deposit will I need for a 6 times income mortgage?

Most lenders will want to see a 10% deposit, ideally from your savings or as a gift from a parent. If you want to purchase a £100,000 home, you would need a £10,000 deposit and would be applying for a £90,000 mortgage. This means you would need to be earning £15,000 per year.

Can I get a joint mortgage with 6 times income?

Yes, you can apply with a partner to increase the total borrowing amount. For example, if you earn £30,000 per year and your partner earns £35,000 per year, you could secure a mortgage of up to 6 times £65,000, which is £390,000.

Will a credit card and personal loan prevent me from securing this mortgage?

Any existing payments and financial obligations will be taken into consideration when making a lending decision. The decision to offer 6 times your annual income is not about income alone, it also looks at the affordability of the loan. Many lenders will deduct the amount of outstanding debt from your income to help to make sure the loan is affordable. If you can pay off this debt before applying, you could be in a much better position.

If I own another property, will this impact my application?

If you have a rental property, the income from this rental must exceed your existing mortgage commitments. If you have a significant margin, this income may be factored into the 6 times income calculation. A smaller margin could reduce the amount you can borrow.

Can I remortgage to 6 times my income?

Yes, and this could be an excellent way to bring down your monthly payments. You could also release equity from your home to pay for home improvements.

Can a married individual apply alone?

Unfortunately no, if you are married, you will need to apply with your spouse.

Can I get a 6 times income mortgage with credit issues?

Lenders will want to see a history of good credit before offering such high levels of lending. As a general rule, a CCJ, arrears or defaults will cap your lending capacity at around 4.5 times your annual income. An IVA or bankruptcy will cap your lending capacity at around 3.5 times your annual income.

If you have bad credit and want to secure the best possible deal, we can help to connect you with the right brokers and lenders. We have experience working with borrowers with unique personal circumstances who want to secure a great deal on their mortgage, remortgage or buy-to-let property.

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