Considerations when Getting a mortgage 4.5 times your salary

People always wonder whether it is indeed possible to get a mortgage for up to 4.5 times their salary. Getting a mortgage for 4.5 times your salary is very much possible as there are mortgage lenders that offer this mortgage multiple. Whether you will be eligible for this mortgage multiple of 4.5 times salary will depend on your circumstances so the best way to figure out if you can get a mortgage for 4.5 times your salary is to use a mortgage affordability calculator or speak to a mortgage broker who can provide you advice on this.

Yes, you may be eligible for a mortgage 4.5 times your salary but this will depend hugely on your mortgage affordabilty. Do you have a big enough mortgage deposit? Do you have enough disposable income per month to cover the monthly repayment cost of a mortgage which is 4.5 times your salary? Are you buying a house with standardized construction? Do you have a low debt to income ratio? Is your credit score good enough for a mortgage 4.5 times your salary?

These are all factors you must consider when looking into getting a mortgage 4.5 times your salary.

Loan to value caps

Aside from the mortgage multiple of 4.5, most mortgage lenders have a cap on the loan to value rates they will offer on a mortgage so although you may initially assume they will lend you a certain amount based on a mortgage multiple of 4.5 you will still need to ensure you have a sufficient mortgage deposit to ensure you are within the mortgage lenders loan to value lending criteria.

Monthly disposable income

Most mortgage lenders now place more scrutiny on your monthly expenses and income. They will usually break this down into income, committed expenditure and lifestyle expenses to derive your monthly disposable income.

If it appears you are spending too much of your income and you are just able to afford a mortgage which is 4.5 times your salary by analysing the monthly repayments of a mortgage offered by the lender then the mortgage lender may not lend to you as you do not have enough room in your monthly income for emergencies or if the rate on your mortgage rose.

Most mortgage lenders will conduct this stress test to see if you can comfortably afford a mortgage of 4.5 times your salary.

Can you get a 4.5 times mortgage with bad credit?

Getting a mortgage with bad credit may be much harder than if you had a good credit rating but getting a mortgage that is 4.5 times your salary with bad credit may be even harder. This is because mortgage multiples usually range from 3 all the way to 6 with some mortgage lenders and a mortgage that is 4.5 times your salary is towards the higher end of that scale.

This means that those sort of mortgages is likely reserved for those with good credit or sizeable mortgage deposits.

You may still be able to get a mortgage which is 4.5 times your salary but it may be through a specialist mortgage broker such as a bad credit mortgage broker.

Bad credit may include:

A CCJ

An IVA

A debt management plan

A default

A bankruptcy

A home repossession

Can you get a 4.5 times mortgage if you are self-employed?

As a self-employed prospective mortgage borrower, your main challenge is going to be proving that you have a reliable source of income and being able to evidence this with the necessary documents. Most self-employed mortgage lenders insist on you having 3 years worth of accounts when trying to evidence your income but you may be able to find mortgage lenders that accept 12 months worth of accounts.

Whether you may be able to get a mortgage for 4.5 times your salary will depend on how much of your salary the mortgage lender chooses to include in its mortgage affordability assessments.

Some mortgage lenders will accept up to 100% of your self-employed income but others may accept substantially less.

If you can usually evidence your income then you may be able to find a mortgage lender who is able to lend to you at 4.5 times your salary but you may also need a good mortgage deposit and a good credit score.

You may want to consider using a self-employed mortgage broker to assist you.

What mortgage deposit will you need for a 4.5times mortgage?

The amount of mortgage deposit you will need based on a mortgage which is 4.5 times your salary will depend on your individual circumstances but it will also heavily depend on the mortgage lenders loan to value rate.

Generally speaking the higher the mortgage multiple the higher the mortgage deposit you may need to put down.

Yes, getting a joint mortgage is one of the other ways to reduce the time it takes you to get on the property ladder. When getting a joint mortgage, the mortgage lender will usually consider the incomes of both parties.

It is worth noting that some mortgage lenders place a cap on how many people can be in a joint mortgage to between 2 or 3.

When getting a joint mortgage you should remember that both parties will be equally responsible for the mortgage.

Yes, in most cases mortgage lenders will let you put any benefits or supplementary income towards your mortgage affordability assessment but it is worth noting that most mortgage lenders will have a cap on how much of your supplementary income they will accept.

If most of your income is made out of benefits for example, then you may be best looking for a mortgage lender that accepts benefits.

You should inform your mortgage broker about this and they will look to find you a mortgage lender who may be able to accept a high majority of your income and still offer you a mortgage multiple of 4.5 times your salary.

Some of the benefits and supplementary income mortgage lenders may accept include:

Pension income

Investment Income

Overseas earned income

Maintenance Payments

Rental Income

Bursary

Stipend

• Attendance Allowance benefit
• Carer’s Allowance benefit
• Child Benefit
• Child Tax Credit benefit
• Disability Living Allowance (DLA)
• Incapacity Benefit (IB)
• Industrial Injuries Benefit (IIB)
• Maternity Allowance benefit
• Pension Credit benefit
• Severe Disablement Allowance
• Widow’s Pension benefit
• Working tax credit benefit

Government schemes for a 4.5times income mortgage?

You may be able to get a mortgage which is 4.5times your salary by using government home buyers or home movers scheme to improve your mortgage affordability.

You may be eligible for some first time home buyer government schemes which may reduce the total cost of the property or increase your mortgage deposit.

• Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
• Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
• Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
• Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
• Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
• Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
• Right to buy- allows you to buy your home at a discount price.
• Preserved right to buy– same as above.
• Right to acquire- same as above.

Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.