A mortgage lender is letting me borrow 5.5 times my income – but should I?

Is the mortgage market turbulence getting you down? Have you got a mortgage-related question you need answering? Email in, and we will get one of our experts to reply. Nick Mendes, mortgage technical manager at John Charcol, has given his advice to a reader below. If you have a question for our experts, email us at money@theipaper.com.

Question: I’m buying my first home and have noticed that lenders such as HSBC are now willing to lend up to 5.5 times my income. Even though I qualify to borrow this much, is it genuinely advisable – or am I taking on too much risk?

Answer: Every first-time buyer I speak to tells me the same thing: saving for a deposit is tough, but the real frustration comes when they find out how much (or how little) they’re allowed to borrow. When a big bank like HSBC raises the limit and says you might be able to stretch to 5.5 times your income, it’s no wonder people sit up and take notice.

That sounds like a game-changer. Traditionally, most lenders have capped things at around 4 to 4.5 times income.

That extra allowance to 5.5 could mean another £20,000, £30,000 or more to play with. In today’s market, that might be the difference between a cramped one-bed flat and a place with a spare room, or between buying in the area you want and having to look further out.

But here’s the bit I always stress: just because you can borrow more doesn’t automatically mean you should.

While banks will assess affordability – looking at your income, your bills, and running what’s called a stress test to see how you’d cope if rates rose – that can only ever tell part of the story. But lenders don’t know that you’re planning to start a family, that you love to travel, or that your car could give up on you at any moment. They see the numbers; they don’t see the real-life trade-offs that matter to you.

This is where a bit of realism comes in. A mortgage that looks affordable on a spreadsheet can feel very different once it hits your bank account each month. Say you borrow £250,000 over 30 years. At 5 per cent interest, that’s roughly £1,340 a month. If rates nudge up to 6 per cent, suddenly it’s about £1,490. An extra £150 may not sound earth-shattering, but if you’re already tight, it can be the thing that tips you into stress.

I see this a lot: buyers push to the maximum because they’re desperate to secure the right home, but then discover they have no slack for holidays, savings, or even a rainy-day fund. Life rarely goes in a straight line. Redundancy, illness, maternity leave, or even just choosing to cut back your hours can all make a stretched mortgage feel like a weight around your neck.

That said, borrowing at the higher end isn’t always a bad move. For someone with solid career prospects, whose income is likely to grow, it can be a calculated risk. If stretching now gets you a two-bed instead of a one-bed, you might save yourself the hassle and expense of moving again in a few years. In that scenario, the bigger mortgage could make long-term sense.

So how do you decide? A few practical steps help. First, stress test yourself, work out how your budget looks if rates climb by one or two per cent. If you can still breathe easily, fine. If you can’t, it’s a warning sign. Second, be honest about your plans. Kids, career changes, even lifestyle choices all affect your income. Third, think about what you’re giving up. A bigger mortgage might mean fewer holidays, less going into your pension, or no buffer for surprises.

Finally, don’t feel you have to figure this out alone. A good mortgage broker can not only tell you which lenders are offering higher multiples, but also whether that really suits your circumstances.

The fact that HSBC and others are raising their limits is worth knowing about, and it will help some people. But treat these new rules as an option, not a target. The goal isn’t to borrow the maximum the bank says you can. The goal is to borrow an amount that lets you sleep at night and still live your life.