An increasing number of lenders are looking at affordability, rather than applying a one-size-fits-all multiple to your income.
However, income multiples are still popular and by looking at what lenders typically offer you can get an idea of how much you can borrow.
Someone buying alone will usually be offered a mortgage of around three to three-and-a-half times their gross annual earnings.
Where there are two or more borrowers, the lender may be prepared to offer three times the annual income of the highest earner, plus the other income(s), or two-and-a-half times the joint income.
It may be possible, though, to borrow as much as five times your salary.
Other earnings, such as commission or overtime, may be taken into consideration by the lender, but it depends how regular these earnings are.
When processing your application the lender may get in touch with your employer to confirm your salary.
If you are self-employed you will be asked to supply two or three years’ audited accounts or an accountants letter, unless you go for a self-certification deal.
The lender will also check you have kept up repayments on an existing mortgage or made regular rent payments.
Most lenders offer mortgages of up to 90 or 95 per cent of the value of the property, or the price you are paying for it – whichever figure is lower – but some will offer 100 per cent mortgages.
Loans with a very small or no deposit often incur a charge to cover the lender for taking the extra risk. This is called higher lending charge (HLC) and is one of a number of costs that can be attached to getting a mortgage.
Find out how much you can borrow.
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