Typically, the high street will lend 4.5 to 4.75 times a client’s income. However, it is possible to get 5 times income, and sometimes even more than 5 times, with a specialist lender when looking at the client’s overall wealth.
FREQUENTLY ASKED QUESTIONS (FAQS)
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Most lenders will only take 50% of a client’s bonus income into consideration for affordability and take an average of the last 2-3 years. This is because bonuses tend to fluctuate. However, there are a handful of lenders who can use 100% of bonus income – but the bonus would ideally need to be consistent and around the same amount each year for this to be the case.
High street banks won’t use stock and vesting stock for affordability. Some private and investment banks will most certainly look at factoring it in to increase borrowing power.
The majority of lenders will only take into account the salary and dividends a director draws out of their company for affordability.
However, some lenders can look at using the director’s share of net profits before tax, which can often help increase borrowing power, as clients don’t always draw their full share of profits each year for tax purposes.
Yes, many private and investment banks will lend to non-UK nationals that have never even stepped foot in the UK.
British expats and clients returning to the UK after living overseas for many years can also get a UK mortgage – both on a residential and buy to let basis.
There are a handful of lenders that will consider 85% loan to value (LTV) on loans over £1million if the client has a strong income to support the loan.
There are some lenders that will allow a parent to be partied to a mortgage with their children to help them get on the ladder.
This is often seen in London where the children are just starting out their employment and can’t support a mortgage with their starting salaries. The parent can then guarantor the mortgage if they can show sufficient income to support the loan.
Most lenders will require the client to have an investment vehicle or a buy to let property in the background in place to repay an interest only mortgage at the end of the term.
A lot of lenders can now accept a client will downsize at the end of the mortgage term to repay the loan with the equity.
A handful of lenders will allow this to be the case for loans over £1million if there is enough equity in the property. Often, a portion of the loan will be payable on an interest only basis, with the rest on capital and interest.
Most lenders will only lend to the state retirement age or up to the age of 70.
Some lenders, mostly building societies and private banks, will look at lending to a client up to the age of 85 on a residential basis, if there is enough overall wealth in the background and pension / investment income to support the loan.
It is possible to obtain lending on a BTL property with very little income – even as low as £10,000 – as a lender would look at the client’s overall wealth or BTL portfolio, also taking the clients share of net profits from their company into account.
If the lender is happy the loan could be supported in any rental void periods.