Lending Multiplier

What is a Lending Multiplier?

Lenders use a Lending Multiplier based on your income to assess your Affordability for a Mortgage. Typically this calculation works out between 3.5 x and 5.5 x your income. That means If you earn £20,000 a year you would be able to borrow a maximum amount of £70,000 based on a 3.5x multiplier or £110,000 based on 5.5 x multiplier.

In recent years, with the sharp increase in the price of housing lenders have had to adjust these calculations to keep pace with house prices. This has seen this simple calculation often be used less as lenders switch to using calculations based on a percentage of the customer’s income.

For example: a repayment cannot exceed 40% of a person's monthly income minus existing financial commitments. The maximum mortgage amount can then be calculated from the payment amount.

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