How much can I borrow?
The maximum amount you can borrow depends on a combination of how much you earn, your incomes, outgoings and the value of the property.
We assess the maximum we are prepared to lend based on the following income multiples as a rough guide:
| Annual gross income: | Employed | Self-employed (All income) |
| Loan to value ratio (LTV): |
Loans up to 75% of property value | Loans up to 75% of property value |
| Single income: | 3.5 × gross income | 3.5 × gross income |
| Joint incomes: | 3.5 × higher gross income plus 1 × lower gross income |
3.5 × higher gross income plus 1 × lower gross income |
| Or if greater: | 3 × joint gross incomes | 3 × joint gross incomes |
Gross income means basic gross salary and permanent allowances such as area or car allowance, plus half bonuses, overtime and commission where these can be proved to be regular. For self-employed customers gross income will be the net profit of the business.
We also take into account the loan to value (LTV) ratio. This means the amount of loan in proportion to the value of the property. The LTV is always expressed as a percentage. For example a £75,000 loan on a property valued at £100,000 would be 75% LTV. Please see the section below for more details about this.
Affordability
Income multipliers are only a guide and we will also take into account any regular credit commitments which have 12 or more months to run and, in the case of shared ownership/shared equity, the rent and service charges. On the basis of the information provided we will assess your ability to afford the mortgage and consider what effect future interest rate rises could have on your finances. This is to help guard against the mortgage becoming unmanageable. If there are any concerns over your ability to afford the mortgage, where possible you will be informed before the application proceeds to valuation.
If you are self-employed, the amount you can borrow will normally be based on your audited business accounts for the past three years and income will be taken to mean net profit before tax and drawings.
Property value
The amount we lend cannot exceed a certain percentage of the value of the property. This is referred to as the maximum loan to value (LTV) ration. The maximum LTV depends on the particular mortgage product chosen (see individual product details). Please see the table below for general guidance:
| Advance range | Loan to value |
|---|---|
| Up to £500,000 | 75% LTV |
| £500,001 - £750,000 | 65% LTV |
| £750,001 - £1,000,000 | 55% LTV |
| Over £1 million | Please contact us |
Length or term of the loan
You can choose to repay your mortgage over a period of between 5 and 25 years. The longer the term, the smaller your monthly payments ? but the greater the total amount payable overall. If your mortgage term extends beyond your retirement, you will need to ensure that you have arrangements in place to continue to make your monthly payments. Your mortgage should normally be repaid by the time you are 70.
Higher lending charge
Exceptionally, we may agree to you borrowing more than 75% loan to value. If we do so, we may take out a Mortgage Indemnity Insurance policy, for which you may be required to pay the premium (depending on the product you select). If you are to be responsible for the Mortgage Indemnity Policy premium this will be stated under the special conditions of your offer of advance. This policy protects us from the risks of lending a high percentage of the value of the property. If your property is taken into possession by us in the future and is sold for less than the amount you owe us, the insurance policy allows us to recover the shortfall from the insurer. You will still have to pay all the sums due under the mortgage, including arrears, interest and our legal fees, and so the insurance policy does not protect you. The insurer will be able to reclaim from you any money it pays us under the insurance policy.
Verification
We will need to see evidence of your income and, if you currently have a mortgage, evidence that your payments are up to date.
Employed
- Written employer's reference or last three months' payslips (all applicants)
- Last three months' bank statements
Self-employed
- Three years' audited accounts
- Last six months’ bank statements
- An accountant’s certificate confirming how long they have worked with you and a declaration of any matters which may affect your ability to repay
Mortgage
We will need to see evidence of your payment history, which can be
- Latest mortgage statement
- Payments shown on latest bank statements
- A reference from your existing lender
Your evidence should show all but the most recent payments over the last twelve months.
