How can I get a bigger mortgage in the UK?

Embarking on the journey to homeownership is an exciting adventure, but the size of your mortgage can be a crucial factor in turning that dream home into a reality.

If you're wondering how to get a bigger mortgage in the UK, this guide can help.

We explore practical strategies to help you navigate the mortgage landscape and potentially boost the size of your home loan.

Summary

• There are several ways to increase the amount of money you can borrow
• Lenders consider various income sources when assessing your mortgage application
• Most mortgage lenders take bonuses into account
• Outgoings, future income changes and dependants can impact the amount you borrow

How much can I borrow with a mortgage?

The amount you can borrow for a mortgage is influenced by several factors, including your income, credit history, and monthly expenses.

Generally, lenders follow the "affordability" principle, which means they assess your ability to repay the loan.

This usually involves multiplying your income by four to calculate how much you can afford to borrow.

Some lenders may consider multiplying your income by up to four and a half times (or even more), but eligibility is likely to be tougher the more you want to borrow.

Learn more: what to do if you can't remortage due to affordability

How to increase the amount you can borrow

There are several ways to increase the amount of money you can borrow for a mortgage.

These include:

Improving your credit score

Your credit score plays a pivotal role in determining the mortgage amount you qualify for.  

A higher credit score indicates financial responsibility, making you a more attractive borrower.  

To boost your credit score:

• Check your credit report: Obtain a copy of your credit report and rectify any errors as soon as possible.
• Pay your bills on time: Timely payments positively impact your credit score, showcasing your reliability to lenders.

Saving for a larger deposit

The size of your deposit directly influences the mortgage amount.

A larger deposit reduces the loan-to-value (LTV) ratio, making lenders more willing to offer a higher mortgage.

 Consider these tips:

• Set a savings goal: Establish a clear savings goal for your deposit and an anticipated time period to hit your target. 
• Cut any unnecessary expenses: Identify areas where you can cut back to bolster your savings. 

Reducing your debt 

Lenders scrutinise your debt-to-income (DTI) ratio.

Cutting your existing debts enhances your eligibility for a larger mortgage:

• Prioritise high-interest debts: Tackle high-interest debts first to free up more disposable income.
• Consolidate your debts: Explore options to consolidate debts for more manageable payments.

Consider joint applications

Joining forces with a partner or family member can increase your combined income and, subsequently, the mortgage amount: 

• Choose a reliable co-applicant: You should opt for a co-applicant with a stable income and good credit history. 
• Understand joint responsibilities: Be aware that both applicants share responsibility for mortgage repayments. 

Taking out a longer mortgage term

Opting for a longer mortgage term can reduce monthly repayments, making it easier to qualify for a larger loan: 

• Understand the trade-off: While monthly payments decrease, the overall interest paid over the loan term increases, costing you more in the long run.. 
• Consider future income changes: Ensure the longer term aligns with your future financial prospects. 

Using other people to boost your mortgage

Leveraging the financial standing of others can boost your mortgage potential: 

• Guarantors: Having a guarantor with a strong financial standing can increase your borrowing capacity. 
• Family assistance: Some lenders may accept financial assistance from family members, potentially boosting your mortgage size.

What types of income do lenders accept?

Lenders typically consider various income sources when assessing your mortgage application.

The primary focus is on stable and verifiable income.

Here are common types of income that lenders accept:

1. Employment income

Regular employment income is a key factor in mortgage approvals.

Lenders often consider your salary, employment history, and job stability.

Providing recent payslips can support your application. 

2. Self-employed income

If you're self-employed, lenders will scrutinise your business accounts and tax returns.

Demonstrating a consistent income and profitability can enhance your chances of securing a larger mortgage. 

3. Rental income

If you have rental properties, lenders may include a portion of the rental income when calculating your borrowing capacity.

Ensure you have documentation, such as lease agreements, to support this income.

Do mortgage lenders take bonuses into account?

Yes, bonuses can be considered by mortgage lenders, but the approach may vary.

Some lenders take an average of your bonuses over a specific period to provide a more stable income picture.

Others may consider only guaranteed bonuses.

It's essential to discuss your specific bonus structure with potential lenders to understand how it impacts your mortgage eligibility.

What other factors will lenders consider? 

1. Outgoings and expenses

Lenders evaluate your monthly outgoings and living expenses to determine your ability to manage mortgage repayments.

It's crucial to provide accurate information about your regular expenses, including utility bills, insurance, and any debts. 

2. Future changes in income

Lenders may consider potential changes in your income, such as upcoming promotions or salary increases.

However, it's important to be realistic and provide evidence to support these anticipated changes. 

3. Dependents and family size

The number of dependents and your family size can influence your borrowing capacity.

Lenders take these factors into account when assessing your ability to meet mortgage payments while managing other financial responsibilities. 

Final thoughts

Getting a bigger mortgage is a comprehensive process that involves careful financial planning and understanding the intricacies of the mortgage landscape.

By improving your credit score, saving strategically, and considering various aspects of your financial profile, you can enhance your chances of securing a mortgage that aligns with your homeownership goals.

Remember, consulting with mortgage adviseors and exploring diverse lenders can provide valuable insights and options tailored to your unique situation.

With the right approach, you can pave the way to a more substantial mortgage and turn your homeownership dreams into reality.