Which mortgage lenders offer the highest income multiples for first-time buyers

Which mortgage lenders offer the highest income multiples for first-time buyers?

 

First-time buyers are no longer automatically restricted to borrowing four or 4.5 times their salary. A growing number of banks and building societies may offer five, six or even seven times income, potentially making it possible to purchase a more expensive property.

Nationwide, Halifax, Barclays, Teachers Building Society, Tipton & Coseley Building Society and April Mortgages are among the lenders offering enhanced income multiples to eligible borrowers.

However, the maximum income multiple is only one part of a lender’s affordability assessment. Your income, deposit, credit commitments, employment status, mortgage term and credit history will all influence how much you can actually borrow.

How much could a first-time buyer borrow?

The table below illustrates the potential mortgage available at different income multiples. These figures are examples rather than guaranteed loan amounts.

Annual household income	4.5 times income	5.5 times income	6 times income	6.5 times income	7 times income
£30,000	£135,000	£165,000	£180,000	£195,000	£210,000
£40,000	£180,000	£220,000	£240,000	£260,000	£280,000
£50,000	£225,000	£275,000	£300,000	£325,000	£350,000
£60,000	£270,000	£330,000	£360,000	£390,000	£420,000
£75,000	£337,500	£412,500	£450,000	£487,500	£525,000
£100,000	£450,000	£550,000	£600,000	£650,000	£700,000

 

For example, a couple earning a combined £50,000 might ordinarily expect to borrow around £225,000 at 4.5 times income. A lender prepared to offer six times income could potentially increase this to £300,000—an additional £75,000.

1. Nationwide Helping Hand: up to six times income

Nationwide’s Helping Hand scheme has been a game changer for the first-time buyer mortgage market and has helped thousands of people get onto the property ladder.

Eligible first-time buyers may be able to borrow up to six times their income, which is up to 33% more than Nationwide’s standard 4.5-times-income calculation.

Nationwide provides the following examples:

• A single applicant earning £30,000 could potentially borrow up to £180,000, compared with £135,000 under a standard 4.5-times-income calculation.

• Joint applicants earning £50,000 could potentially borrow up to £300,000, compared with £225,000 without Helping Hand.

• Joint applicants earning £90,000 could potentially borrow up to £540,000.

The current minimum income is £30,000 for a sole applicant or £50,000 for joint applicants. Helping Hand is available on selected five- and ten-year fixed-rate mortgages, including options for those with 5% deposits.

Nationwide has also reduced the minimum combined income required for some of its separate six-times-income lending options from £100,000 to £75,000. That change applies to eligible home movers and remortgage borrowers rather than replacing the specific Helping Hand rules for first-time buyers.

2. Halifax First-Time Buyer Boost: up to 5.5 times income

Halifax’s First-Time Buyer Boost could allow eligible buyers to borrow up to 5.5 times their household income.

To qualify:

• At least one applicant must be a first-time buyer.

• Total household income must be at least £40,000.

• Applicants will need to meet Halifax’s credit-scoring and affordability requirements.

• The scheme can increase the maximum mortgage by as much as 22%.

A couple earning £50,000 could potentially borrow approximately £275,000 at 5.5 times income, compared with £225,000 at 4.5 times income.

Halifax has also expanded First-Time Buyer Boost to eligible applications containing self-employed income, subject to its full lending criteria.

Halifax offers separate low-deposit support, including a £5,000 Deposit Mortgage on qualifying property purchases of up to £300,000. The rules for this product differ from those applying to First-Time Buyer Boost.

3. Barclays: potentially up to six times income

Barclays’ maximum income multiples can range from around four times income to as much as six times income, depending on the applicants’ circumstances.

Barclays considers factors including:

• Total household income

• Loan-to-value

• Existing debts and financial commitments

• Debt-to-income ratio

• Required mortgage amount

• Credit score

• Mortgage term

Higher-income borrowers with limited unsecured debt and a suitable deposit are generally more likely to qualify for Barclays’ largest income multiples.

For example, a household earning £75,000 could potentially borrow up to £450,000 at six times income. However, Barclays’ affordability calculator may produce a lower figure after considering committed expenditure and other application details.

4. Teachers Building Society: up to seven times income!

Teachers Building Society may lend teachers and other eligible education professionals up to seven times their single or joint income, subject to affordability.

Only one applicant needs to be an eligible teacher or education professional. The lender says it can assist early-career teachers, supply teachers, contract teachers and applicants who are still completing probation.

Teachers Building Society gives the example of two applicants each earning £33,000 potentially borrowing £412,200. A single education professional earning £33,000 could potentially borrow £196,400, subject to the lender’s criteria and affordability assessment.

For applications that do not include an eligible education professional, the maximum is generally five times income.

5. Tipton & Coseley Building Society: up to 6.5 times income

Tipton & Coseley Building Society has reintroduced its High Income Multiple mortgages, allowing eligible applicants to borrow up to 6.5 times income.

The lender uses a personalised underwriting approach and may be suitable for borrowers who can demonstrate that they can comfortably afford a larger mortgage.

Its high-income-multiple purchase option is currently available at up to 80% loan-to-value, meaning applicants will ordinarily need a deposit of at least 20%.

At 6.5 times income:

• A household earning £50,000 could potentially borrow £325,000.

• A household earning £75,000 could potentially borrow £487,500.

• A household earning £100,000 could potentially borrow £650,000.

The actual loan will depend on the applicants satisfying the lender’s affordability, credit and property requirements.

 

6. April Mortgages: up to seven times income

April Mortgages may offer eligible borrowers up to seven times their income through its longer-term fixed-rate mortgage range.

This could allow:

• Someone earning £40,000 to borrow up to £280,000.

• A couple earning £60,000 jointly to borrow up to £420,000.

• Applicants earning £100,000 jointly to borrow up to £700,000.

April Mortgages specialises in longer-term fixed rates. Its mortgages also offer additional flexibility, including no early repayment charge when borrowers move home, subject to the product conditions.

A longer fixed rate can provide payment certainty, but borrowers should compare the rate, fees and flexibility against shorter fixed-rate mortgages before committing.

7. Joint borrower sole proprietor mortgages

A joint borrower sole proprietor mortgage, commonly known as a JBSP mortgage, can help a first-time buyer use a parent’s or family member’s income to increase their borrowing capacity.

The supporting person is named on the mortgage and shares responsibility for repaying it, but they are not named as an owner on the property deeds.

For example, a first-time buyer earning £35,000 may not be able to borrow enough in their sole name. Adding a parent’s income to the affordability calculation could substantially increase the available mortgage, depending on the lender’s criteria and the parent’s age, existing mortgage, debts and retirement income.

NatWest describes its Family-Backed Mortgage as a JBSP arrangement that can allow a borrower to add another person to the mortgage without giving that person ownership of the property.

At least 35 banks and building societies now offer some form of JBSP mortgage, although their rules vary significantly. Some accept parents only, while others may consider siblings, partners, wider family members or friends.

Independent legal and tax advice may be appropriate because every borrower remains jointly responsible for the mortgage debt.

Does it make sense to borrow seven times your salary?

Generally not. It really depends on how much you want to get on the property ladder. In order to work out if a lender will offer an income-stretch mortgage, they will normally assess:

• Basic salary and acceptable additional income

• Whether applicants are employed, self-employed or contractors

• Credit cards, personal loans and car finance

• Student loan deductions

• Childcare, maintenance and other regular expenditure

• The size of the deposit

• The required mortgage term

• Applicants’ ages

• Credit history

• Property type and condition

• The mortgage interest rate used in its affordability assessment

Two people earning exactly the same salary could therefore receive very different maximum loan amounts.

Are high-income-multiple mortgages risky?

Borrowing six or seven times income can help a first-time buyer escape rising rents or move out of the family home, but it also creates a larger long-term financial commitment.

Applicants should consider whether they could still afford the mortgage if:

• Their monthly household costs increased.

• One applicant temporarily stopped working.

• Bonus, overtime or commission income reduced.

• The mortgage rate was higher when the initial deal ended.

• They needed to pay for unexpected property repairs.

Keeping an emergency fund covering at least three or four months of essential expenses can provide useful protection. First-time buyers should also consider suitable life insurance, income protection and critical illness cover.

Aaron Strutt, Product Director at Trinity Financial, comments:

“It was not that long ago that most first-time buyers could borrow four-and-a-half or five times their salary, and even then some people thought lenders were stretching affordability too far. Times have certainly changed.

“Property prices have become so expensive and homeownership is so far out of reach for many people that a higher income multiple may be their only realistic route onto the property ladder. We initially saw lenders move towards 5.5 times salary, followed by six times income. It is now possible for suitable first-time buyers to obtain mortgages of six or even seven times salary through specialist banks and building societies.

“These mortgages are not suitable for everybody. They tend to work best for applicants with stable incomes, limited credit card balances or personal loans and a good credit history. Anyone borrowing six or seven times their salary should ideally retain a financial buffer and have a plan for dealing with unexpected changes to their income or expenditure.

“The mortgage market has become much more complicated. When lenders relied on straightforward income multiples, it was relatively easy to estimate how much someone could borrow. Today, every lender has its own affordability calculator, maximum income multiple and approach to different types of income.

“The amount a first-time buyer can borrow may depend on whether they are employed or self-employed, the size of their deposit, their monthly commitments, whether they have been renting and whether they can obtain support from their parents.

“Mortgage lenders have worked hard to attract first-time buyers because they account for such a significant proportion of the property purchase market. This has resulted in more high-income-multiple, low-deposit, no-deposit and family-assisted mortgage options.

“We have previously seen lenders tighten their acceptance criteria quickly during recessions, market disruption and the pandemic. They may not always be as generous as they are today.

“If you have found a property or want to establish your buying budget, it makes sense to check the whole market. There may be more mortgage options available than you realise, but the lender offering the highest income multiple will not necessarily provide the cheapest or most suitable deal.”

Find out how much you could borrow

Trinity Financial’s mortgage brokers can calculate how much you may be able to borrow and compare standard, high-income-multiple and family-assisted mortgages from across the market.

We regularly help first-time buyers with:

• Five, six and seven-times-income mortgages

• Small-deposit mortgages

• Joint borrower sole proprietor applications

• Gifted deposits

• Self-employed and contractor income

• Bonus, commission and overtime income

• Complex credit histories

• First-time buyer mortgages in London and across the UK

Speak to a first-time buyer mortgage broker

Trinity Financial’s brokers help first-time buyers understand how much they can borrow, compare mortgage rates and navigate the application process.

We can also explain deposit requirements, lender affordability rules, mortgage fees and the additional costs involved in purchasing a property.

Call Trinity Financial on 020 7016 0790, book a consultation, or use our appointment calendar.

The information contained within was correct at the time of publication but is subject to change. It is for general information purposes and is not advice.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage.