Loan to Income (LTI) Limit
In general, the maximum mortgage amount is 3.5 times the assessable income of the applicants. If you earn variable income in addition to your basic salary (e.g. commission, bonus, overtime, shift allowance, etc.), then your assessable income can vary from one lender to the next. For example, some lenders will allow 100% of average variable income to be taken into account if you can provide three P60s from your current employment, whereas other banks will include 50% of the average for the last two years. This differences in credit policies can have a big impact on the basic calculation of 3.5 times incomes.
3.5 Times is a Maximum, Not a Guarantee
Many people assume that they will automatically qualify for 3.5 incomes. However, this is a maximum amount, and is not guaranteed. The actual maximum amount for any borrower takes into account numerous other factors in addition to income, including age, household size, financial commitments, etc. Once we can get a full picture of your circumstances, then
Exceptions to the 3.5 Times Income Limit
The banks are allowed to make some exceptions to the LTI limit. Each lender can offer more than 3.5 times incomes to 20% of first time buyers (FTBs), and to 10% of second and subsequent buyers (SSBs). The actual maximum mortgage amount may vary substantially from one bank to the next, with a typical upper limit of 4-5 times incomes.
