Whenever the topic of mortgage affordability comes up, most people will tell you that you can borrow around 4.5X your income as a mortgage. That is the general industry standard and has been for a number of years as a means of limiting lender liability and the risk of lending too much money to people who may not be able to afford it. In reality, most people pay much more than that towards rent, especially in places like London where the average rent is £935. So surely mortgage lenders can lend on higher income multiples? Breaking news out of Santander today reports that they will potentially be willing to lend up to a 5.5 times salary mortgage. Here is a breakdown of what they have said.
Up To 5.5 Times Salary Mortgage From Santander
In a message to mortgage advisers today, Santander have announced that they have altered their LTIs (Loan to incomes) meaning that people will be able to borrow higher income multiples, subject to meeting their criteria. Generally most mortgage lenders will lend 4.5X income as a mortgage. So if you earn £50,000 a year, a standard mortgage would be around £225,000 potentially. However, Santander have said that they will be willing to lend between 4.45X and 5.5X income depending on a borrower’s income and the deposit size you are able to provide.
The specifics are:
Capital and Interest Mortgage Loan
Less than £45,000 mortgage:
- 4.45X income allowed up to 90% LTV (10% deposit) – This means that if you are borrowing less than a £45,000 mortgage, Santander can lend you up to 4.45X your annual income.
£45,000 – £99,999 mortgage:
- 5X income up to 85% LTV (15% deposit) – This means that if you are borrowing up to £99,999 and have as little as 15% deposit, Santander can lend you up to 5X your income.
- 4.45X income over 85% LTV (15% deposit or less) -This means that if you are borrowing up to £99,999 with less than 15% deposit, Santander can lend you up to 4.45X your income.
£100,000 or more mortgage:
- 5.50X income up to 75% LTV (25% deposit) – This means that if you are borrowing an unlimited mortgage with a minimum of 25% deposit, Santander can lend you up to 5.50X your income.
- 5X income up to 85% LTV (15% deposit) – This means that if you are borrowing an unlimited mortgage with a minimum of 15% deposit, Santander can lend you up to 5X your income.
- 4.45X income over 85% LTV (15% deposit or less) – This means that if you are borrowing an unlimited mortgage with less than 15% deposit, Santander can lend you up to 4.45X your income.
Part Capital Repayment and Part Interest only (Any loan part)
Less than £99,999 mortgage:
- 4.45X income over or below 75% LTV – This means that if you are borrowing less than £99,999 with either 25% deposit or less, Santander can lend you up to 4.45X your income as long as part of the loan is on interest only.
£100,000 or more mortgage:
- 5.50X income up to 75% LTV (25% deposit) – This means that if you are borrowing £100,000 or more with a minimum of 25% deposit, Santander can lend you up to 5.50X your income as long as part of the loan is on interest only.
- 5X income over 75% LTV (25% deposit or less) – This means that if you are borrowing £100,000 or more with 25% deposit or less, Santander can lend you up top 5X your income as long as part of the loan is on interest only.
Why Is This An Important Piece Of News?
Some people might say “So what?”. Well this is in fact a very significant breakthrough for Santander as it is the latest in a number of improvements to their mortgage lending criteria and affordability. Last month Santander announced that they would be changing their criteria around credit cards and loans. Historically Santander have insisted that all debt (credit cards and loans) regardless if they are being cleared before the mortgage completes, be included in mortgage affordability. This understandably led to many mortgage affordability checks falling short. However, Santander have now scrapped this and improved their policies on credit card debt.
This new change to loan to income multiples signals to us that Santander are actively trying to help borrowers and their mortgage brokers to get the mortgage they need, rather than tightening their purse strings. A lot of people won’t even realise that a 5.5X income mortgage is possible, and it could really make a difference to a borrower’s mortgage affordability. For example:
Say you are purchasing a £500,000 flat in London and you have a 25% deposit (75% LTV). That leaves a mortgage of £375,000. You earn £75,000 a year salary with no extra income and no outstanding credit or debt. A standard mortgage lender would be willing to lend you between £333,750 and £337,500 as a mortgage. But, the new LTI changes that Santander are introducing means that you could potentially borrow up to 5.50X your income as a mortgage. That means that your maximum mortgage affordability could be £412,500.
Speak To A Mortgage Advisor To Get Higher Mortgage Borrowing
If you are one of these people who are looking for higher mortgage borrowing but just falling that little bit short with most high-street lenders, then you are the perfect candidate to potentially get a Santander 5.5 times salary mortgage. The best thing to do is call our team at Oportfolio Mortgages today so that we can run through a free mortgage affordability check with you. We have access to over 90 different mortgage lenders with different mortgage lending criteria, and our job is to help you get the best out of your mortgage borrowing. Call us today to see how we can help you get the mortgage lending level you need.
