The amount you can borrow when taking out a mortgage could vary by tens of thousands of pounds, depending on which lender you choose.
We’ve analysed the rules set by some of the UK’s biggest banks, and found that depending on your circumstances, you could borrow anything from four to five-and-a-half times your annual income.
Here, Which? explains how banks decide how much you can borrow, and offers advice on the pros and cons of borrowing more.
How do banks decide how much I can borrow?
When you apply for a mortgage, the amount you’ll be allowed to borrow will be capped at a multiple of your household income.
Broadly speaking, most lenders will allow you to borrow up to four-and-a-half times your annual earnings.
This means if you’re buying a home with your partner and you earn £30,000 each (£60,000 in total), you might be able to borrow up to £270,000, subject to meeting the lender’s other affordability criteria.
The Bank of England limits the number of mortgages that can be granted at more than four-and-a-half times earnings as part of its lending rules.
How can I borrow more?
It can be possible to borrow more if you meet certain criteria. Some banks allow a limited number of applicants to borrow five or even five-and-a-half times their income.
Whether you’ll qualify for a bigger loan depends on how much you earn and the loan-to-value (LTV) that you’ll be borrowing at.
For example, Halifax will allow couples with a combined income of £50,000 to £75,000 to borrow five times their income at up to 75% LTV.
Applicants earning over £75,000, however, can borrow up to five-and-a-half times their income.
Income multiples: how the biggest banks match up
Rather than setting one borrowing cap, the biggest banks generally set ranges based on the risk they’ll be taking on.
For example, a first-time buyer with a low income might only be able to borrow at a multiple towards the lower end of the range, while a home mover with significant equity or high earnings is likely to be accepted for a bigger loan.
The table below shows how the UK’s biggest banks assess your affordability, and the criteria you’ll need to meet to get the maximum income multiple.
| Lender | Maximum income multiple | Who can get the maximum multiple? |
| Halifax | 4.49 to 5.5 times annual income | Households earning more than £75,000, borrowing up to 75% LTV. |
| NatWest | 4 to 4.85 | Applicants borrowing up to 75% LTV. |
| Santander | 4.45 to 5.5 | Households earning more than £100,000, borrowing up to 60% LTV. |
| HSBC | 4.49 to 5 | Households earning more than £100,000, borrowing up to 85% LTV. |
| Barclays | 4.49 to 5.5 | Households earning more than £100,000 or single borrowers earning more than £75,000. Max of 85% LTV. |
| Virgin Money | 4.49 to 5 | Households earning more than £50,000, borrowing up to 80% LTV. |
| Yorkshire Building Society | 4.49 to 5 | Households earning more than £70,000. |
| TSB | 4.25 to 4.75 | Households earning more than £40,000, borrowing up to 85% LTV. |
Source: Moneyfacts, 12 November 2021. Data wasn’t available for Nationwide or Coventry Building Society.
Could my career affect my borrowing power?
Your job might also have an impact on how much you can borrow, as some banks offer ‘professional’ mortgages that allow applicants in certain industries to borrow more.
For example, Metro Bank usually allows applicants to borrow up to 4.49 times their annual income, but those who work in specific professions (including doctors, solicitors, actuaries and engineers) and earn more than £100,000 can borrow up to five-and-a-half times their income.
If you work in one of these industries, it’s worth speaking to a mortgage broker about which banks may allow you to borrow more.
Should I always borrow the maximum I can?
Being able to borrow extra when buying a home might give you greater scope in your property search, but it’s not always the best thing to do.
First of all, it’s important not to overstretch your finances. Think carefully about how your mortgage and additional outgoings (such as utility bills) will affect your outgoings on a month-to-month basis. Don’t take on a bigger loan just because you can.
If you focus on lenders who will offer you the most, you might also miss out on a better rate. This can have the knock-on effect of leaving you with higher monthly repayments.
Finally, think about your career plans and prospects. If you’ve got a promotion or wage rise coming up, you could use the extra cash to make overpayments on your mortgage rather than as a platform to borrow more.
How to choose a mortgage lender
If you’re thinking of applying for a mortgage, it can be helpful to take advice from a whole-of-market mortgage broker, who can analyse the criteria used by different banks to find the right mortgage for you.
If you’re going it alone, make sure you compare the overall costs of mortgages rather than focusing purely on the initial rate. Pay particular attention to any up-front fees and early repayment charges.
Finally, it’s important that your mortgage lender will be there for you if you face any issues. Our mortgage lender reviews combine testimonials from thousands of customers with an analysis of the best deals to ensure you find a bank that combines a top rate with great customer service.
