What does Income Multiples mean?

An income multiple is the guiding formula which is taken into account by a lender when you file a request for a mortgage loan. The formula is as follows: you are basically eligible to borrow a sum that will not exceed the threefold of your annual salary. Thus, if your annual income is £30,000, this means you are normally eligible to a loan of £90,000.

Certainly this is only a basic calculation, and many times lenders don’t even take this as a “must” calculation. You may know of instances when somebody was made eligible of borrowing £90,000 without having a yearly income of £30,000, but he/she may offer to the lender their life insurance so that is a good guarantee as well.

The most intriguing part of a mortgage is the interest rate, and given the fact that depending on the type of mortgage you take out, the interest rates fluctuate as the real estate market does, this is the real factor you take into account firstly when contracting a mortgage. The better the terms of the interest rate on a mortgage, the easier it will be for you to pay it off.