The lowdown on 5x Salary Mortgages and available help from Shire Direct...
The 5x Salary Mortgage is a mortgage whereby the borrower can borrow as much as 5 times their salary, and in some instances even higher.
"Explained things in concise clear language. Easy manner - no pressure - created environment to make a decision."
Mr & Mrs M., Leeds, West Yorkshire
Let's take a closer look at 5x Salary Mortgages, and even higher salary multiples, how they work, how they came to be, the importance of ensuring your mortgage is affordable and how Shire Direct can help with a 5x Salary Mortgage or even higher!
Table of Contents:
5x Salary Mortgages or even more!
So, 5x Salary Mortgages or even more! Oh how the times have changed! Gone are the days of mortgage queues, and a compulsory 10% deposit!
The UK's mortgage marketplace is now a vibrant, sophisticated and innovative environment where the demands and needs of the customer are firmly in the forefront!
Up until fairly recent times the mortgage market place in the UK was dominated by building societies, who had a virtual monopoly in being able to fund house purchase loans. For decades they ruled the roost in determining how much potential homebuyers could borrow by the application of a somewhat staid and inflexible yardstick of income multipliers.
Traditionally, the measure for calculating the maximum mortgage loan was set at 3+1 or 2.5 joint. In essence, this meant that the maximum mortgage advance was restricted to 3x the main earner's basic salary, plus 1x the salary from the other applicant. The alternative calculation was set at 2.5 x the joint basic salaries. Few uplifts were available for overtime, bonus or commission payments.
Why has this changed? Does it mean that I can now borrow more on mortgage?
Yes, the changes will invariably provide you with much improved borrowing capacity! The expansion of the UK mortgage marketplace in the late 1980's has seen a progressive shift by lenders to help satisfy the appetite of the British home-owning culture.
In fairness, the new breed of mortgage banking outlets and centralised lenders, have responded magnificently to the changing face of employment and pay structures that are now prevalent within commerce.
Much more flexibility is given to borrowers whose emphasis on pay is structured more and more to productivity and profitability. Overtime and shift working is a common feature of many salary structures these days, and of course, the politicians have encouraged more and more of the populous to become self-employed, and because of the size of this sector, mortgage lenders have been innovative in their lending policies in order to capture this market.
So, is it true I can borrow 5x Salary on Mortgage?
Yes, quite simply 5x salary mortgages are available in today's mortgage market. Infact up to 6x salary mortgages can be achieved.
However, it is of course very important that you do not overstretch yourself, and you should always bear in mind potential increases in mortgage rates of interest. That's why this type of 5x or even 5.9x salary mortgage may be geared to a fixed rate mortgage product that has a minimum 5-year fixed rate.
Is it correct that some lenders are able to offer 7x salary mortgages?
This is partially true. Let's explain. As we have already seen, Mortgage Lenders these days apply a variety of technical methods to check the maximum mortgage loan they are prepared to offer, and of course these limits must be affordable.
Many mortgage lenders now calculate the mortgage they will offer by comparing your total debt against your total joint income. For example, this type of calculation will usually take 40 - 50% of total join income from all sources. The resulting figure must be sufficient to accommodate the monthly mortgage borrowings and any other regular debt payments that will have to be paid.
So for instance if a couple had a monthly joint gross income of £4,500; a lender using a debt to income ratio of 50%, would allow £2,250 to cover all monthly debt commitments, including the new mortgage.
In old income multiplier terms, this can convert to income multipliers as high as 7x salary or even more! However, when examined more closely, these larger equivalent income multipliers generally only apply to borrowers having much higher incomes.
Would you recommend borrowing at 5x salary on mortgage or even higher?
Until we have carefully assessed your circumstances, needs and requirements we wouldn't be able to recommend any product to you.
We are always very mindful whatever mortgage advice we provide you with, it must be within your budget, not only now, but also into the future. Obviously it would be unwise to borrow more than you can comfortably afford!
Do all lenders accept overtime, commission, or bonus payments?
Most will consider taking into account overtime, but some restrict it to that which is guaranteed. Other lenders will take a proportion of overtime payments, although may only apply a 1x multiplier to this element of your pay. Similar restrictions will often apply to commission or bonus payments.
The good news is that within our portfolio of mortgage providers, we have a range of products that will consider overtime, commission and bonus in full, as well as taking additional income from second or part-time employment into account.
Can Shire Direct help arrange 5x salary mortgages or even higher?
Here at Shire Direct, we're always mindful that arranging a mortgage is probably the largest personal financial transaction you will ever enter into.
And so as professional mortgage intermediaries, the first thing our qualified mortgage advisors will do is ensure we understand your circumstances, needs and aspirations, because advice and service always come first at Shire.
A quick call to one of our professionally qualified Mortgage Advisors on Freephone 08000 282 281 will soon put you in the picture. They'll carefully assess your situation and provide you with the options that may be open to you, in order to arrive at the most appropriate and affordable solution.
So, if you need to explore the availability and affordability of mortgage funding, and the amount you may be able to borrow, we would naturally be delighted to discuss your requirements with you. Our lines are open seven days a week until 10.00pm, and we're confident that you'll be impressed with our comprehensive and personally attentive service. You can also enquire online at any time, even at 3am in your pyjamas if it suits you!
You'll find us to be friendly and unstuffy, and we'll provide you with information in a language you can understand, free of jargon! We feel we have the expertise and resources to come up with just the right solution for you - whatever your requirements, so contact us today, you'll be glad you did!
So, that concludes our look at 5x Salary Mortgages and even higher salary multiples, and the importance of ensuring they are affordable! Hopefully you found it useful! Keep in mind, we're just a free call or a couple of mouse clicks away and would love to hear from you!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
Over £2,000 worth of Argos Vouchers to be won in the Shire Direct Grand Prize Draw 2008! Terms and conditions apply - please read article for full details.
Claim £100 worth of Argos Vouchers upon completion of your transaction throughout 2008. Terms and conditions apply - see our Vouchers Special Offer page for full details.
