Mortgage Glossary: Income Multiples

Income Multiples

Your "income multiple" is used as a guide to how much a lender will be prepared to advance you on a mortgage. As a very rough rule of thumb, the maximum amount you are normally able to borrow to purchase a property will be three times your annual salary. Alternatively, it tends to also be 2.5 times your "joint income" if you are buying with a partner.

As an individual, this would mean on a salary of £25,000, you could expect to raise a mortgage of £75,000. As a couple, with one earning £25,000 and the other £20,000, you would be able to borrow up to £112,500.

The above is not set in stone. There will be occasions when you"ll be lent more.

The above "income multiple" rule of thumb may be useful for the lender as a guide but it will tell you little about how much you can actually afford to repay. The reason is because mortgage rates are a key factor in determining the affordability of houses. The lower the rate the less a given mortgage is going to cost you but if interest rates rise the actual cost to you each month will also rise.

Get professional help from a qualified independent mortgage advisor and see how much you could save on your mortgage payments. There's no obligation, just plain good advice.

See also: Financial Services, Mortgages