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Income multiples versus affordability has commented on income multiples versus affordability and using stretched income calculations.

Rachel McKay, mortgage analyst for, says: “In many ways weve started to come full circle as more providers move to evaluating how much a borrower can afford to repay rather than using income multiples.

“On the face of it both calculations seem quite straightforward. With income multiples, a provider will typically lend three times salary. Lending based on affordability looks at what is left over from your pay packet after deducting all your outgoings.

“In both cases you may have the opportunity to request an underwriter to have a further look at the calculation and potentially allow a stretch. This means taking certain things into account, which may influence the underwriter to allow a higher (stretched) level of borrowing. The criteria may include lower LTV, overtime and/or bonus payment being included in the calculation and even a high credit score allowing more flexibility.

“Another look at the application is normally carried out after the credit score of the application and multiple applications can leave a mark or footprint on your score, which may not be in your favour, so bear this in mind.

“Income stretchers can be useful, but should always be used with caution and allowances should be built in for emergency expenditure.”


We give real binding decisions, not decisions in principle

From Jeff Knight I would like to respond to last week’s Star Letter (Mortgage Strategy October 24). I was pleased to note that in the long list of lenders which have caused him delay, Jonathan Burridge did not include GMAC-RFC. And if he thinks we undersell our service in any way, I can safely say […]

Network Data launches proposition for DA brokers

Network Data has launched a proposition for directly authorised intermediaries. The proposition offers a range of benefits, which include access to exclusive mortgage and insurance products, and free access to its mortgageLink software that now includes integrated access to the Mortgage Trading Exchange. Registration is free and also includes free software training courses and business […]

The Yorkshire implements Speed-trap online system

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Lib Dems back PPI campaign

The Liberal Democrats have backed Paymentcare’s campaign to get the Office of Fair Trading to force high street providers to label their payment protection cover with a ‘no obligation to buy’ warning. Vincent Cable, shadow chancellor for the Liberal Democrats, has signed up to the campaign. In light of concerns about the potential mis-selling of […]

Mental health in the mainstream

By Amanda Docherty, senior marketing consultant Apart from career success, millions in the bank and, on appearance, coveted lifestyles, what else do Rio Ferdinand, Lady Gaga and Ellie Goulding all have in common? They’ve all demonstrated that the power of celebrity can sometimes have a more altruistic purpose than idle gossip. Recently we’ve seen respected […]


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