Over the past 20 years, the typical UK property price has risen by 85%, adding almost £125,000 to the cost of a home.
As house prices have climbed, lenders have looked at ways to help buyers stretch their budgets. One of the main changes has been increasing how much you can borrow compared with your income.
Recently, three major lenders have raised their loan-to-income limits. Here, we explain who can qualify for larger loans, the risks to consider and reveal which of these lenders is a Which? Recommended Provider.
Which lenders will let you borrow six times your income?
In January, NatWest and Nationwide joined Barclays in offering loans to home movers up to six times their income.
NatWest will offer loans up to six times income on mortgages with a loan-to-value (LTV) ratio of 75% or less. This means a customer earning £75,000 could potentially borrow up to £37,500 more.
Nationwide also now offers lending of up to six times income to both new and existing customers moving home or remortgaging. However, this is available on LTV ratios of up to 95%.
To qualify for larger loans compared to the size of your income, lenders have minimum income requirements:
- Both Nationwide and NatWest require sole applicants to earn at least £75,000 a year, or £100,000 for joint applications.
- Barclays require joint applicants to have a total combined income of at least £75,000 to access six times income lending. The provider’s LTV requirements sit in between Nationwide and NatWest, at 85%.
Nationwide says existing customers who previously took out its Helping Hand mortgage are exempt from the higher income thresholds. Helping Hand is Nationwide’s scheme for first-time buyers that allows borrowing of up to six times income, subject to eligibility.
- Find out more: best mortgage rates
Why are lenders changing loan-to-income ratios?
In the summer, the Financial Conduct Authority relaxed long-standing rules limiting high loan-to-income lending.
Previously, lenders could issue only 15% of new mortgages at more than 4.5 times a borrower’s income. Under the updated approach, individual lenders can exceed this level, although a cap still applies across the market as a whole.
The change has given lenders more flexibility to offer larger loans. It comes as house prices continue to outpace earnings in many parts of the UK. Over the past decade alone, the average property price has risen by 44%.
- Find out more: how to apply for a mortgage
Is it a good idea to borrow more?
Higher loan to income ratios are particularly helpful for buyers in the South East of England and London, where property prices are generally highest.
It is important to fully understand the implications of taking out a larger loan. For example, a couple with a joint income of £100,000 taking out a £450,000 mortgage at 4.5 times income would face monthly repayments of £2,435.30 (based on a mortgage rate of 4.24%).
If that loan increases to six times income, or £600,000, monthly repayments rise by more than £800 to £3,247.07.
So while you may be able to borrow more, it may not always be the right choice for you. You should consider how higher repayments would affect your day-to-day finances and whether you are comfortable prioritising more of your income towards your mortgage.
Ultimately, everyone’s circumstances are different. What matters is being fully informed before making a decision.
- Find out more: what’s happening to house prices?
How much can first-time buyers borrow?
Most first-time buyers are typically limited to around 4.5 times their income. However, Nationwide allows eligible first-time buyers to borrow up to six times their income through its Helping Hand scheme.
To qualify, single applicants must earn at least £30,000, while joint applicants need a combined income of £50,000.
Nationwide says the changes have already had an impact. Last year, it saw a 57% increase in the number of first-time buyer mortgages taken at or above five times income compared with 2024.
- Find out more: how much can you borrow for a mortgage?
Do the best lenders offer larger loans?
Yes. Nationwide is joint-top of our table and our only Which? Recommended mortgage lender.
To find out why Nationwide is our only WRP, head to the Nationwide lender review. You will find feedback from real mortgage customers and Nationwide’s best rates.
But it’s not just Nationwide that we’ve reviewed. We’ve rated 21 lenders, including Barclays and NatWest, on their customer service, competitiveness of rates and much more.
So if you are looking for a mortgage, make sure to check out our mortgage lender reviews.
