Mortgage lenders seem to be moving away from income multipliers to help them decide how much they can lend to an individual.
The move towards affordability-based mortgage lending means "we've started to come full circle", believes mortgage analyst Rachel McKay.
Affordability-based mortgage lending calculates how much a person will be able to repay after all expenses have been deducted from their salaries.
With income multiples, mortgage lenders calculate typically three to three-and-a-half times a person's salary to determine how much they will lend to a potential mortgage borrower.
Ms McKay, from financial website Moneyfacts.co.uk, points out that potential mortgage borrowers can request an underwriter to have a further look at the calculation and potentially allow a 'stretch' of income .
In cases like these, the underwriter might include lower loan to value, overtime or bonus payments in the calculation to stretch the level of borrowing, she says.
Potential mortgage borrowers with a high credit score could also use this to achieve a higher level of borrowing .
Even though income stretchers could be handy, Ms McKay offers a word of warning. She urges potential mortgage borrowers to use caution and that "allowances should be built in for emergency expenditure".
Mortgage lenders move to affordability, expert says
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Mortgage lenders move to affordability, expert says
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