HSBC offers 6.5 times income mortgages – what you need to know

HSBC UK has announced that it will offer mortgage lending of up to 6.5 times income for some customers, making it the largest income multiple available to mortgage borrowers in the current market. We explain who can take advantage of this higher level of borrowing, how it compares to other lenders and whether it’s a good idea.

Who can get HSBC’s 6.5 times income mortgage?

HSBC has chosen to reserve its 6.5 times income mortgage lending for Premier Account customers only. Premier Account holders must earn a solo salary of at least £100,000 paid into the account or have at least £100,000 saved or invested with HSBC. It means that the 6.5 income multiple will be limited to the bank’s high-value customer base.

It is not uncommon for lenders to offer higher income multiples to those in certain professions or by stipulating a minimum income requirement. However, most other comparable mortgage deals in the market are also available to those with an income of less than £100,000. For example, employed individuals earning £35,000 can secure a mortgage with Nationwide of up to six times their income. You can also get a mortgage at 6 times your income with Chorley Building Society as long as you work in one of the professions under its higher lending criteria.

You can find a summary of all the qualifying criteria for other high income multiple mortgages in our article, “How much can I borrow on my mortgage?”.

How much can you borrow at 6.5 times income with HSBC?

In theory, HSBC Premier Account holders can borrow upwards of £650,000 if they qualify based on a minimum qualifying income of £100,000. Similarly, Premier customers who earn less than £100,000 but qualify based on their savings and investments held with the bank will see their borrowing power increase from an upper limit of around 5.5 times their income to 6.5 times. Based on a £60,000 annual salary, this would be the difference between being able to borrow £330,000 and £390,000.

Head of Mortgages at HSBC UK, Oli O'Donoghue, stated that, "This increase reflects both our confidence in the financial resilience of our Premier customer base and our commitment to responsible, sustainable lending". The bank points out that it is responding to its customers' needs to bridge the gap between earnings and rising property prices.

However, the enhanced income multiple lending is limited to mortgages of up to 90% of a property's purchase price. Where a mortgage applicant chooses to buy at the upper end of this limit, the lender's other qualifying criteria, such as the maximum loan amount at the requested loan-to-value (LTV), may restrict how much they can borrow.

How does HSBC's 6.5 income mortgage compare to other lenders?

In a market where 6.5 times salary mortgage lending is extremely rare, HSBC’s new enhanced offering stands out and is likely to attract attention. It follows the bank's decision to increase income multiples for lending to first-time buyers in September this year, when it raised the loan-to-income ratio for buyers in this category to 5.5 times income. The average borrower in the UK now needs approximately 7.7 times their annual income to purchase a house. Meanwhile, the average borrower can typically only secure a mortgage loan of around 4.75 times their income, thus prompting the demand for increased lending limits.

Income multiples, or what some lenders refer to as the loan-to-income ratio, determine the parameters for the amount of mortgage you can borrow based on your earnings. Income multiple limits typically range between 4 and 6 times your annual income and it is normal for the upper tiers of lending to be conditional based on specific qualifying criteria. You will find a summary of the highest income multiples available in the market in our article, “How much can I borrow on my mortgage?”.

Is borrowing a high multiple of your income a good idea?

Borrowing a high multiple of your earnings is likely to mean that your monthly mortgage payment is a larger proportion of your overall income and may affect your ability to meet other everyday bills and costs. Some mortgage brokers have cautiously commented that encumbering yourself in this way could leave less room for manoeuvre if your household costs were to rise. Others believe that increasing income multiples for borrowing could reflect some of the practices that contributed to the 2008 financial crisis, when relaxed rules enabled risky lending.

However, your personal circumstances will determine your level of borrowing and it is always wise to discuss your needs with a mortgage specialist to source the most appropriate solution before proceeding.

If you do not have a mortgage broker already, then you can source one using the online professional directory, Vouchedfor* where mortgage brokers are listed by location, expertise and customer reviews. Alternatively, you can contact the online mortgage broker, Habito* where the mortgage advisers have access to 100s of mortgage deals from over 90 lenders in the UK. It is one of the first mortgage brokers of its kind providing mortgage advice online and over the phone.

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