With the recent 'credit crunch' the heady heights of 8 times income are no longer. All lenders are now being more cautious in their lending. Many have reduced the 'stretch' on income they will lend to.
Even so, income multiples of 4 + 1 or 5 + 1 can be found. The upper limit though seems to be about 5.5 + 1 (for high earners with no dependents).
Provable Income
You will need to prove your income to the lender. The way you prove your income will depend on if you are classed as 'employed' or 'self employed'.
Employed
If you are classed as 'employed' then you will usually prove your income using your last 3 months payslips, a P60 or through an employers income reference.
When calculating the maximum a lender will offer you, your income will be split into:
Basic
Overtime
Bonus
Commission
Then when the income multiple calculation is performed, some lenders will take all of your overtime, bonus or commission into account, others may only take 50% into account or even ignore it completely.
Second Job or Other Sources of Income
Income from a second job or other sources of income could be used to increase the loan you can get. How this will work will depend on the lender. Some will want you to provide proof of the income. Or you might need to self certify this income.
High Bonus or Commissions
If your income is largely made up of bonuses or commissions then many lenders may only count that income at 50% when calculating how much they will lend. In this case, you may need to self certify this income so it can be taken at 100%.
Self Employed
If you are classed as 'self employed' then you will usually prove your income using your most recent 3 years accounts. Some lenders will take 2 years accounts since they will show figures for 3 years.
