How much can I borrow for my remortgage?
- The short answer is, about four and a half times your income.
- But some lenders may offer as much as five and a half times your income.
- How individual lenders assess your income (e.g., bonus, commission or self-employed) is key.
Your Borrowing = 4.5 to 5.5 x your income
How much will a remortgage cost?
This is driven by the structure of the lending.
- The structure of your remortgage (repayment, interest-only, or a combination) is one of the biggest drivers of your monthly costs.
- The other aspect to consider is the type of mortgage product, either a fixed or variable rate, which will help determine the level your monthly payments.
Need advice?
Speak to your Remortgage broker today for remortgage advice on how much you can borrow and how much it will cost for your remortgage.
We can also help with your
- Buy to let remortgage.
- Remortgage to buy second home.
Remortgage simple illustrations
Here are some simple examples of how a lender could assess your income.
1. Employed: no Bonus
A simple example.
Let’s say you earn £100,000 a year. As an estimate you can borrow around £450,000.
| Annual salary |
£100,000 |
| Multiplier |
£100,000 x 4.5 |
| Estimated Borrowing |
£450,000 |
But the way the banks assess income doesn’t mean it always works out like that.
2. Employed: with Bonus
So, for example if you do earn £100,000 pounds, it might be that your basic salary is £50,000, but your bonus is £50,000.
Now what some of the lenders will do is take half of that bonus income into consideration when assessing your income (and some don’t take any at all).
This means for 4.5 times your income you can borrow around £337,500, rather than the £450,000 you were expecting.
| Basic salary Bonus |
£50,000
£50,000 |
| Multiplier: salary |
£50,000 x 4.5 |
| Borrowing: salary |
£225,000 |
| Bonus as assessed by lender |
£25,000 |
| Multiplier: bonus |
£25,000 x 4.5 |
| Borrowing: bonus |
£112,500 |
| Estimated Borrowing |
£337,500 |
It is important to note that this is a ‘standard’ starting point. Some lenders will offer a lot more, some less, but this gives you a good yardstick to estimate how much you can borrow for your remortgage.
3. Self-employed
If you’re self-employed your remortgage deals are a lot more complex still.
Lenders will consider one, some or all of the following – your profit, your salary, dividends or something called your profit on ordinary activities before tax.
You might be a partner of a Limited Liability Partnership with the complexity of taking your income as drawings.
There are some upsides to being self-employed, for example, if you run a limited company, some lenders will effectively gross up your dividends, which means you might be able to borrow more than you first thought.
It is important to note that this is a ‘standard’ starting point. Some lenders will offer a lot more, some less, but this gives you a good yardstick to estimate how much you can borrow for your remortgage.
Your remortgage structure
One of the first things to consider is the structure of the remortgage.
Do you want to opt for?
- a repayment loan?
- an interest only loan?
- part & part which is a combination of the two?
What is a Repayment mortgage?
You make monthly payments and at the end of the term the loan is repaid.
With a repayment mortgage the monthly payments are higher but with less risk.
What is an Interest Only mortgage?
You simply pay the interest on the mortgage loan and look to pay off the loan later with say, the sale of property, investments, or bonuses.
With an interest-only mortgage the monthly repayments are lower but that does carry more risk as repaying the loan is not guaranteed.
Your mortgage product
You will also need to consider which type of mortgage product is best for you as this determines your monthly payments.
Fixed Rate Mortgage. Does what it says on the tin. Your repayments are set for typically 2, 3, 5, 10 years.
Variable mortgage. This is sometimes cheaper, but the rate can go up or down depending on the market and is often penalty free which gives you more freedom.
They are the things that will effect how much the mortgage will cost, but we tend to look differently by asking – what can you afford?
Your remortgage broker will then structure your mortgage appropriately, based on your risk profile.
What remortgage rates can I get?
- The actual remortgage deals you will be offered will be dependent on your personal circumstance, loan amount and level of equity in your property. Your broker will advise you appropriately depending on your remortgage goals.
- Therefore, think about how much you want to spend each month on your remortgage repayments. Your mortgage broker will advise you on remortgage rates appropriate for you.
- Only brokers have access to a range of lenders in the market, and we have access to exclusive remortgage deals.
We are here to guide you on the remortgage that suits you.
- We will provide you with detailed, personalised advice on how much you can borrow and can source exclusive remortgage deals.
- In today’s mortgage market, each borrower is assessed on their individual affordability merits. Once we have talked through your personal circumstances, we will advise you on remortgage interest rates suitable for you.
- This means you get the right advice crucial to ensuring you get the right remortgage for your circumstances.
For Remortgage Advice
- Rose Capital Partners takes the time to understand your mortgage goals to secure the optimal remortgage deals for your circumstances.
- Our remortgage advice is second to none, hence why we are so highly rated on Google. We will advise you on remortgage rates appropriate for you.
- Our aim is to maximise your borrowing potential, minimise your monthly payments and work with you throughout the lifecycle of the loan to manage down the mortgage until it is repaid in full.
- You are treated as a valued client, not a transaction, and dealt with by an experienced, empathetic person, not an algorithm.
- We have access to competitive deals and with no affiliation to third parties. We will always act in the best interests of you, our clients to give you the best remortgage advice possible to achieve the right remortgage for your life’s goals.
