Income Multiples

Traditionally mortgage companies use income multiples of:

1. 3 times the salary of the highest earner plus 1 times the second applicant's income.

or

2. 2½ times the joint income.

Often this is not nearly enough to satisfy an applicant's requirements.

In recent years there has been a shift towards looking at affordability rather than just looking at salary multiples.

Lenders will now look at your bank statements and your regular outgoings and calculate how much they will lend you. If you run a tight ship with regard to your finances, you may be able to get a bigger mortgage than you would under traditional salary multiple guidelines.

Traditional income multiples

Most lenders now realise that traditional income multiples are a crude measure of the ability to repay.

Lenders will now introduce a greater degree of flexibility.

Affordability potentially offers higher maximum levels of borrowing to certain customers. It takes into account the different levels of essential spending on key household items such as food, bills and transport that different types of household Incur - whereas income multiples do not.