Are seven times LTI mortgages a stretch too far?

Aimed at supporting brokers working with clients who face ongoing affordability challenges, April Mortgages’ enhanced loan-to-income criteria offers eligible borrowers up to seven times their income on its 10- and 15-year fixed rate products. The lender’s greater LTI, available exclusively through intermediaries, is a response - it says - to wage growth struggling to compete with rising house prices. But is it a stretch too far? Some brokers are voicing concerns.

The increased LTI is available to applicants with a household income of £50,000 or more, offering up to 85% LTV. Loan sizes range from £50,000 to £1 million, with exceptions considered on a case-by-case basis up to £2 million. The maximum term is 40 years, and the product is available on residential purchase and remortgage applications - excluding new build and buy-to-let - across England and Wales.

“While innovation is always good, I’d be cautious in viewing seven times LTI lending as a solution for the wider market,” said Sam Mason (pictured left), founder and managing director of The Mortgage & Protection Hub. “Perhaps It should be the exception, not the norm. In my view, while seven times LTI mortgages could open up opportunities for certain borrowers, they do come with risks that shouldn't be overlooked. Affordability is already under pressure with higher interest rates and cost-of-living challenges. Stretching to seven times income could leave borrowers exposed, particularly if their circumstances change, for example, income reduction and further rate increases. It also raises questions about long-term financial resilience - it’s one thing qualifying for a mortgage today, another thing staying comfortable with repayments over the next 10, 25, or 40 years. That said, if these higher LTIs are tightly targeted, say, at high-earning,  professionals with strong future income potential, and if the underwriting is robust, then there could be a responsible space for them. It just needs careful, case-by-case assessment rather than a broad approach.”

Nicholas Mendes (pictured second from left), head of marketing at London broker John Charcol, said that, in theory, someone earning £50,000 could borrow up to £350,000, and assuming an interest rate of 5.4%, which is currently available on a 10-year fix at 75% LTV, the monthly payments would  be £1,782 per month for a 40-year term, and £1,858 per month for a 35-year term. “Based on a take-home pay of around £3,289 per month, after income tax, NI, and a 5% pension contribution, this would represent a significant proportion of monthly income,” Mendes said. “One of the main risks of borrowing six or seven times income is the lack of flexibility. Homeownership brings additional costs beyond the mortgage itself, including maintenance, insurance, and unexpected repairs. With a large portion of income tied up in repayments, there may be little room left for the unexpected. Higher borrowing levels can also limit future options. If income doesn’t rise significantly, or if personal circumstances change, it could become more difficult to remortgage or move home later. Passing  new affordability checks might also become tougher if lending criteria tighten.”

While higher income multiples can help more people on to the property ladder, it’s key that buyers take a long-term view before committing, Mendes declared. “It’s essential buyers allow for breathing space within their budgets, rather than stretching to the maximum they’re offered,” he said. “Maintaining savings, pension contributions, and an emergency buffer are all critical for long-term financial security. It’s not just about whether today’s payments seem manageable, but about considering how life circumstances - such as starting a family, career changes, or planning for retirement - might affect finances over time.”

Lifestyle and longer-term financial goals have to be another key consideration, Mendes suggested. “A high proportion of income tied up in mortgage payments can squeeze other important areas, such as saving for retirement or dealing with rising living costs,” he noted. “Although extending the mortgage term to 35 or 40 years can make monthly payments appear more affordable, it results in significantly more interest paid over the life of the loan. Buyers should weigh the true long-term cost, not just the initial affordability. What looks manageable on paper can feel very different once all financial factors are considered.”

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What’s the biggest risk of higher multiples?

Peter Tsouroulla (pictured second from right), head of mortgages at Trinity Lifetime Partners, has his own experience of high borrowing. “Having borrowed eight times salary back in the day, when I bought my first flat over 30 years ago and then seeing interest rates rise, I can understand why people have reservations about seven times LTI,” Tsouroulla said. “I’ve always personally felt the biggest risk is the potential to go and get additional finance post completion of a mortgage, say for electrical goods or furniture. If somebody has a good track record of income and demonstrates a high credit score, with a strong, sensible approach to their money, I don’t see why not. A good broker will always underwrite the case in advance of any submission to a lender and I would hope that our professional community would counsel against any unmanageable levels of borrowing, based upon a review of bank statements credit score and a full fact find.”

Tsouroulla urged caution about locking in for a 10 to 15-year period. “That is something that I think would need a good, sensible discussion - and consider the impact of repaying early,” he observed. “If the last few months and years have taught us anything, circumstances can change and locking in for the long-term is not without its own risk, especially if we see cuts in rates over the course of the next 12 to 24 months.”

Mortgage broker Luke Senior (pictured right) is cautious about April Mortgages’ offering. “I’d have concerns over a lender offering seven times income, other than in scenarios where the applicants have a very high level of disposable income,” Senior said, “where the normal day to day costs of living are relatively low as a percentage of their take home pay than the rest of us. Another issue would be house price inflation - if more money is in circulation, price increases are an inevitable consequence. I’m not saying the current rules are perfect - they absolutely aren’t, but for me this would be a step too far.”