The Key to Getting 6 Times Income Mortgage

Tip 1: Consolidate your Income

It doesn’t matter if you’re not a highly qualified professional, such as a doctor or lawyer, as there are other factors to consider when it comes to assessing income.

Total income includes additional income other than your salary. Lenders will look at how much overtime pay you receive and they’ll also likely consider bonuses, commissions, and side hustles. In addition, banks will take a look at how much tax you pay and favour those who make sizeable contributions.

For self-employed traders, lenders base the loan amount on your company’s net profit. A good track record and a steady number of customer contracts will also help boost your potential borrowing power.

Those with an annual salary of £75,000 and above have a higher chance of getting mortgage approval. You can get around this by combining the incomes of two or more members of your household as your joint income will improve your mortgage affordability.

What Are Joint Mortgages?

Joint mortgages happen when two to three members of one household combine salaries to take out a loan. This means that you’ll make repayments together.

You can get a joint mortgage with a partner or even a family member who doesn’t live with you. You’ll need to talk with your co-borrowers and decide whether you’ll have equal rights over the property. It’s also possible for each to have a different percentage share of the property.

In the latter case, a solicitor will have to make a deed of trust for you. Don’t worry, most mortgage brokers have this service.

Tip 2: Get Your Financials In Order

Pay your debts off, including any credit cards, before you apply for a mortgage as this will lower your debt-to-income ratio. A good credit score will give you an advantage when it comes to seeking the maximum amount with a 6 times income mortgage.

How Does Credit Score Affect You?

A credit score is a rating that indicates your trustworthiness as a consumer. The higher the rating, the more trustworthy you are likely to be viewed as a borrower by UK lenders.

• To improve your credit score, do the following:
  Use your credit card for purchases to build a good track record.
• Make payments on time and in full.
• Avoid moving location as lenders can be a little suspicious if you keep changing your address.
• Don’t max your credit limit out as this signals that you may be spending beyond your means.

How to Minimise Outgoings

Outgoings are any costs that you have to pay monthly. This includes utility bills, leisure activities, and dependents like children or pets.
To minimise your outgoings, try following these tips at least six months before you apply for a mortgage:

• Avoid going on vacations as this will inflate your average spending amount.
• Categorise your spending to keep only essentials and eliminate excess costs.
• Go for cheaper options when shopping for groceries.
• Don’t purchase pets or make extra monetary commitments.

Tip 3: Increase Your Deposit and Decrease Your Loan-to-Value

A deposit is a mandatory amount you pay to lenders upfront. Most lenders will require you to pay at least 10% of the property value though in the case of 6 times income mortgages, it’s ideal to have a large deposit, often around 40% the value of the property. 

However, that’s not the only advantage of having a big deposit! Lenders offer discounts and lower interest rates to those who are able to pay more upfront.

The size of your deposit is also closely related to your loan-to-value. Lenders consider this when deciding how much they are willing to lend to you.

What Is Loan-to-Value?

Loan-to-value or LTV is the percentage of your deposit compared to your mortgage.

For example, if your mortgage is £100,000 and you pay a deposit of £10,000, it means you’re borrowing £90,000 from the lender. This gives you an LTV of 90%. 

A lofty LTV means you’re a high risk for lenders and they’ll be less willing to give you the amount you want.

How Does Loan-to-Value Work?

The ideal LTV for lenders is 60%. If you have a higher LTV, banks will charge you more to offset your risk.

It’ll be harder to pay for your mortgage if your interest rate increases. You can potentially save thousands of pounds just by lowering your LTV!

Tip 4: Prolong Your Mortgage Term

This one is simple. Banks will prefer if you have a longer payment term. A typical payment term is for 25 to 30 years.

Spreading the mortgage over a long period helps lessen the financial stress on you. You’ll be paying the bank interest for longer, but there’s no need to rush.

You can use excess cash on other investments that’ll help you generate more income. Channelling your wealth towards paying off your mortgage as fast as possible might cripple you in the long run.

Mortgage lenders understand this principle. They’ll be more likely to give bigger mortgages to those who set reasonable repayment schemes for themselves.

Tip 5: Find a Guarantor

Borrowers who can’t afford to pay for a mortgage on their own can get a guarantor. A guarantor promises to pay for your loan in case you’re unable to meet the deadline. They can’t relinquish this responsibility until you’re in a position where you can pay the mortgage off by yourself.

To qualify to have a guarantor, you must meet the following requirements:

• The guarantor must be a parent or a close relative of the borrower.
• The guarantor should be a UK resident and have his income paid through a UK bank.
  
  

The loan-to-value of the mortgage must be 85% or lower.

Tip 6: Have a Trusted Mortgage Broker

If all of this information is overwhelming for you, then it may be time to leave it in the capable hands of a competent and reputable mortgage broker like When the Bank Says No. Here’s why.

Brokers Have Connections

Our mortgage brokers have contacts with multiple banks and specialist lenders. It’s not a big issue if you have a low credit score. If one lender tells you no, we’ll simply look for another lender that is more likely to say yes!

There are more loan options as well. We’re here to match you to a mortgage that’s the best for your circumstances. You’ll certainly have a bigger chance to get a 6 times income mortgage with an experienced broker.

You Can Experience Faster Approvals

Lenders are bureaucratic. There are a lot of processes to go through before they can approve your mortgage. It might take months to secure a loan if you attempt to do it yourself.

One of our experienced brokers can help you lessen the wait time. With direct access to lenders, you can often have your loan within 30 days of application.

Brokers know that speed matters in real estate. Getting hold of the funds in quick time may help in securing cheaper or better deals on properties.

You Can Save on Costs

Having a mortgage broker doesn’t mean things work out more expensive for you. In reality, you could save a lot more! This is because brokers have access to wholesale lenders with lower rates.

Brokers eliminate middlemen like bank managers and marketing teams that need extra payment. Plus, they have the experience to help you finance tricky deals.

Less Hassle Overall

Brokers are easier to contact than banks. A broker can answer all your concerns through a quick meeting or phone call. On the other hand, if you call a bank or other lender, you’ll often be sent to their automated answering machines. There’s also less time-consuming paperwork since brokers will handle these for you.