There are two types of mortgage exceptions
- Loan to income
- Loan to value
Loan to income mortgage exception
As mentioned, under current rules the maximum a borrower can ask for is 3.5 times their income. This applies for individual and joint mortgage applications. Furthermore, borrowers must have a deposit of 10%.
However, as we have detailed above 20% of mortgages that lenders offer can be at a 4.5x multiple of income.
This is only available to first-time home buyers.
Loan to value mortgage exception
For buyers who are not first time buyers, the loan to value ratio is the mortgage exception lenders can put into place.
This refers to the percentage of value inherent in a property that an individual can borrow for compared to how much they must have in the form of a deposit.
Generally speaking, the minimum deposit required to avail for this type of mortgage exception is 20%. Lenders do have some discretion on this, and occasionally provide mortgages to buyers who have only a 10% deposit.