Should You Consider Borrowing Seven Times Your Income for a Mortgage?

We often encounter clients eager to maximise their borrowing potential. Recently, some lenders have introduced products allowing borrowers to secure loans up to seven times their annual income. While this might seem appealing, it is essential to approach such offers with caution. 

 What does a 7x Income Mortgage entail?  

High Street UK lenders have traditionally capped mortgage income multiples at around 4.5x a borrower's annual income. However, some lenders are now offering high multiples.

More well known high street lenders allow it to 6x income multiples and newerr or less known lenders tend to lend higher with a typical minimum income of around £50k per annum overs, and those remortgaging may be eligible to borrow up to 7x their income, provided they earn a minimum of £50,000 per annum and seek a loan-to-value up to 85%. 

Often, these rates are locked for 10 to 15 years which make considering these high income multiple mortgages even more complex  

The Risks of High Income Multiples 

While the attraction of borrowing more is understandable, it is crucial to consider the potential downsides: 

• Increased Monthly Repayments: Higher loan amounts tend to entail larger monthly repayments, which can strain your budget.  

• Interest Rate Sensitivity: With larger loans, even slight increases in interest rates can significantly impact your repayment amounts.  

• Affordability Concerns: Borrowing beyond your means can lead to financial stress, especially if your circumstances change.  

  
  

 Is it Right for YOU?  

It is important to ask yourself these questions before opting for a high-income multiple mortgage:  

• Can I comfortably afford the monthly repayments?  

• Am I prepared for potential interest rate increases?  

• Do I have a stable and secure income? 

If you have any doubts, it might be wise to consider a more conservative borrowing approach.   While the option to borrow seven times your income is available, it is not suitable for everyone. At Penn Financial, we prioritise your long-term financial well-being. We recommend exploring all available mortgage options and considering your personal circumstances before making a decision. If you need personalised advice, feel free to reach out. 

Lux Mathiy 

0207 183 5938   

lux.mathiy@pennfinancial.co.uk 

Penn Financial   

The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.