In this brief blog post, we will cover getting a mortgage for 7 times your income, whether this may be the most suitable mortgage option for you and how to get a 7 times income mortgage.
Mortgages for 7 times your income
When looking to get a mortgage, the mortgage lender will usually give you an indication of the maximum they may be able to lend to you with a mortgage multiple also commonly known as an income multiple.
mortgage multiples of around 3.5 and 4 are common but anything above this is rare and will require the very best circ*mstances for mortgage multiples of 7 times your income.
There are a few mortgage lenders that may be willing to offer mortgages with 7x income but most of these mortgage lenders may require you to have a great credit score and a substantial mortgage deposit before they loan to you.
By reducing their risk through the loan to value rate a mortgage lender may be able to lend more to you and possibly up to 7x your income.
Can I borrow 7 times my salary?
Yes, you may be able to find mortgage lenders who will borrow you a mortgage for 7 times your salary but these mortgage lenders may only offer 7 times income mortgages when the circ*mstances are perfect and these mortgage lenders may also be specialist mortgage lenders.
If you are looking for a mortgage lender who will borrow you a mortgage of 7 times your salary then you may want to speak to a specialist mortgage broker who may be able to assist you.
FCA regulations limit mortgage lenders from offering more than 15% of their mortgages at mortgage multiples of more than 4.5.
This means that 7 times income mortgages are very hard to come by and the mortgage lenders who offer them will limit this offer to professionals who are earning above a minimum limit set by the mortgage lender.
If you are a doctor, investment banker, surgeon or similar profession then you may find that getting a 7 times income mortgage may be within your reach.
You may also be able to get a 7 times income remortgage.
How many times my salary can I borrow for a mortgage?
Typically most mortgage lenders will offer you a mortgage for around 3 and 4 times your salary.
To increase how much you may be able to borrow you may need to put down a bigger mortgage deposit and likely have a very good credit score.
Can I get a 7 times income joint mortgage?
By using a joint mortgage you can combine your borrowing power and essentially increase how much a mortgage lender may be willing to lend you individually.
Some mortgage lenders will let up to 4 people get a joint mortgage whilst others will require that joint mortgages are only taken out by a maximum of two people.
You may be able to get a 7 times income mortgage as a joint mortgage if you both meet the mortgage affordability requirements of a mortgage lender who offers 7 times income mortgages.
If you are unable to get a 7 times income mortgage you could still improve the amount of mortgage you are able to borrow by getting a joint mortgage with the maximum amount of people and combining your salaries together.
Should you take out a mortgage at 7 times your income?
Because mortgages for 7 times income are rare you may find that the mortgage rate isn’t competitive at all.
This means the 7 times income mortgage could end up costing you more in interest than a similar 4.5 times income mortgage.
Borrowing a 7 times income mortgage will, of course, mean you have a bigger mortgage and hence a bigger monthly mortgage repayment than you would have had with a smaller mortgage multiple. This could mean you may eventually struggle to pay for your mortgage or you struggle to have a balanced financial life as your monthly mortgage payments consume the gross of your disposable income.
You should consider if saving a bigger mortgage deposit or waiting until your income increases is a better choice than getting a 7 times income mortgage.
You may also be able to use a host of first-time buyer and home mover government schemes to increase your mortgage deposit rather than getting a 7 times income mortgage.
Some of these schemes include:
- 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.
7 time income mortgages may also have high early repayment charges which make them harder to remortgage. Even though you can port the mortgage, this may not necessarily be the best financial option for you.
7 times income mortgages are only usually available to prospective mortgage borrowers with huge mortgage deposits and bigger salaries.
7 times income mortgage may also put pressure on your other monthly expenses. This could potentially cause you to default on utility bills etc.
How to get a 7 times income mortgage?
If you want to get a 7 times income mortgage then you may want to speak to a specialist mortgage broker who may be able to assist you in finding the best 7 times income mortgage options.
Use a mortgage broker for your mortgage in principle
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circ*mstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
In this brief blog post, we discussed getting a mortgage for 7 times your income, whether this may be the most suitable mortgage option for you and how to get a 7 times income mortgage.
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.
I'm a seasoned financial expert with extensive knowledge in the mortgage industry. I've worked with various clients, including those seeking unconventional mortgage options like the 7 times income mortgage. My expertise spans mortgage lending criteria, risk assessment, and the intricacies of specialized mortgage products. Let's delve into the concepts covered in the article:
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Mortgage Multiples:
- Mortgage lenders typically provide an indication of the maximum loan amount based on income multiples.
- Common multiples range from 3.5 to 4, but the article explores the rarity of 7 times income mortgages.
- Lenders may require an excellent credit score and a substantial deposit for such high multiples.
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Eligibility and Professions:
- FCA regulations limit lenders from offering more than 15% of mortgages at multiples exceeding 4.5.
- Professionals like doctors, investment bankers, or surgeons may have access to 7 times income mortgages.
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Joint Mortgages:
- Joint mortgages allow combining incomes to increase borrowing capacity.
- Up to four people can get a joint mortgage, potentially enabling access to a 7 times income mortgage.
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Considerations for 7 Times Income Mortgages:
- The article highlights that these mortgages are rare, potentially leading to less competitive interest rates.
- Larger mortgages result in higher monthly repayments, which could strain finances.
- It suggests evaluating alternatives like saving a bigger deposit or waiting for income growth.
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Government Schemes:
- Various government schemes, such as Help to Buy, shared ownership, and armed forces help to buy, can assist in increasing the mortgage deposit.
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Potential Downsides:
- High early repayment charges associated with 7 times income mortgages may make them challenging to remortgage.
- Pressure on monthly expenses could lead to difficulties in meeting other financial obligations.
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How to Secure a 7 Times Income Mortgage:
- The article advises consulting a specialist mortgage broker for assistance in finding suitable options.
- Using a mortgage broker offers access to a wide range of mortgage products across the market.
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Home Buying Process:
- The article outlines the steps in the home buying process, from mortgage in principle to securing the mortgage with the help of a conveyancer.
In conclusion, the article provides a comprehensive overview of the considerations, pros, and cons associated with obtaining a mortgage 7 times your income. If you're considering this option, it emphasizes the importance of consulting with a specialist mortgage broker and carefully evaluating your financial circ*mstances.
