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FAQMYMORTGAGE.CO.UK > MORTGAGE GUIDES > HIGH INCOME MULTIPLE

High Income Multiple Mortgages

With the recent 'credit crunch' the heady heights of 8 times income are no longer. All lenders are now being more cautious in their lending. Many have reduced the 'stretch' on income they will lend to.

Even so, because many lenders nowadays use an 'affordability calculation', income multiples of 4 + 1 or 5 + 1 can be found. The upper limit though seems to be about 5.5 + 1 (for high earners with no dependents).

Provable Income

You will need to prove your income to the lender. The way you prove your income will depend on if you are classed as 'employed' or 'self employed'.

Employed

If you are classed as 'employed' then you will usually prove your income using your last 3 months payslips, a P60 or through an employers income reference.

When calculating the maximum a lender will offer you, your income will be split into:

  • Basic
  • Overtime
  • Bonus
  • Commission

Then when the income multiple calculation is performed, some lenders will take all of your overtime, bonus or commission into account, others may only take 50% into account or even ignore it completely.

Second Job or Other Sources of Income

Income from a second job or other sources of income could be used to increase the loan you can get. How this will work will depend on the lender. Some will want you to provide proof of the income. Or you might need to self certify this income.

High Bonus or Commissions

If your income is largely made up of bonuses or commissions then many lenders may only count that income at 50% when calculating how much they will lend. In this case, you may need to self certify this income so it can be taken at 0%.

Self Employed

If you are classed as 'self employed' then you will usually prove your income using your most recent 3 years accounts. Some lenders will take 2 years accounts since they will show figures for 3 years.

Lenders will want to know how much you make from the company taking into account your:

  • Salary
  • Any Dividends
  • Net Profit

Your last years figures are the most important and will often be the ones on which the income multiple calculations are based.

If the figures vary year to year then an explanation may be needed.

Can't Prove All Your Income

Sometimes it is not easy to prove all of your income. Maybe you are mostly paid by commission, have a second job, have investment income or are self employed. If you are self employed, you may not have enough accounts or you may have used all the legal methods available to you to minimise your taxable income.

In this case the best option for you may be to self certify your income.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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