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Borrowers earning £30,000 a year can now secure a mortgage worth up to five times their annual income with Barclays.
The UK's fifth biggest mortgage lender has announced a suite of changes to its lending criteria, including relaxing the rules around income, which normally limit you to borrowing four-and-a-half times what you earn.
Here, we explain how incomes multiples affect how much you can borrow, and assess how the deals from Barclays compare with the competition.
When taking out a mortgage, you'll usually be able to borrow up to four-and-a-half times your annual income, though some lenders are now bucking the trend.
The new criteria introduced by Barclays mean that anyone earning more than £30,000 a year will now be able to borrow five times their annual income.
This means that on a sole income of £30,000, you might now be able to borrow £150,000 from Barclays, rather than £135,000.
The move comes hot on the heels of several smaller lenders offering higher income multiples to borrowers in specific professions.
Most notably, Darlington Building Society launched a deal at six times income last November, although this was limited to specific types of job, including accountants, doctors and barristers.
In 2014, the Bank of England brought in regulations limiting the proportion of mortgages lenders could grant at more than four times annual income, as it sought to clamp down on what it considered to be risky lending.
This has had mixed results, with the Bank reporting last December that nearly half of new mortgages were at income multiples of four or higher.
There are signs, however, that in a climate of stretched affordability and low mortgage rates, sentiment has shifted slightly.
Last month, one of the Bank's directors, Alex Brazier, said that in this time of low interest rates, only 1% of householders are paying out more than 40% of their pre-tax income to service debt, meaning it would take a 'large and sudden' rise in interest rates before borrowing became problematic.
How much you'll be able to borrow depends on a whole host of things, including your income, debts, credit history, and of course the lender you're applying to.
With that in mind, we've put together a table showing the maximum income multiples used by banks when assessing your affordability.
This should only be used as a guide, as some deals with higher multiples will have strict rules. For example, you might need to work in a certain profession, be taking out a loan of a specific size, or require a guarantor.
Just because you can borrow more, that doesn't necessarily mean you should. After all, taking on additional debt can put a greater strain on your finances.
Consider the following before rushing in:
In the tables below, we've looked at the best rates available to first-time buyers at four popular loan-to-value levels, and assessed how well the lowest introductory rate from Barclays compares to the competition.
As you can see, the Barclays deals tend to rank highly against competitors in the two-year fixed-rate market. In the five-year market, the Barclays deals don't fare so well, with none of its deals landing in the top five at any of the LTVs we looked at.
Two-year fix
LTV | Lender | Initial rate | Revert rate | APRC | Fees | Barclays ranking |
75% | Halifax | 1.44% | 4.24% | 3.9% | £1,499 | 4th (1.52%) |
80% | Halifax | 1.52% | 4.24% | 3.9% | £1,495 | 6th (1.62%) |
90% | Yorkshire BS | 1.79% | 4.99% | 4.4% | £1,495 | 5th (1.87%) |
95% | Newcastle BS | 2.59% | 4.49% | 5.2% | £498 | 4th (2.77%) |
Five-year fix
LTV | Lender | Initial rate | Revert rate | APRC | Fees | Barclays ranking |
75% | Santander | 1.84% | 4% | 3.2% | £999 | 6th (1.88%) |
80% | Halifax | 2% | 4.24% | 3.9% | £1,499 | 8th (2.05%) |
90% | Yorkshire BS | 2.21% | 4.99% | 4% | £1,495 | 10th (2.32%) |
95% | Monmouthshire | 3.08% | 5.24% | 4.5% | None | 18th (3.25%) |
Source: Moneyfacts. 24 June.
If you're searching for a mortgage and are finding things a little complicated, don't worry - we're here to help.
Our first-time buyer mortgage guides will walk you through how much you can borrow and how to improve your mortgage chances.
And when it comes to making the big decision, check out our mortgage lender reviews and ensure you find the best mortgage deal.