Variable income results in 19% lower loan sizes

17 November 2021

The latest Mortgage Broker Tools (MBT) Affordability Index has found that borrowers who have an element of variable income are being offered an average maximum loan size 19% lower than the overall market average.

Analysis of real cases processed through the MBT research platform shows that, over the course of 2021 so far, the average maximum loan size available to mortgage borrowers has been £275,633. However, where borrowers have earned an element of variable income, this average maximum has fallen 19% to £231,999.

The disparity is even greater when it comes to the average minimum loan available to borrowers with variable income. During the same period, the average minimum loan available was £162,371, while the average minimum loan available to borrowers with variable income was 25% lower at £129,909.

Tanya Toumadj, CEO at Mortgage Broker Tools, said: “In recent weeks we have seen more lenders returning to consider variable income as part of their affordability calculations. However, many still do not and even where lenders do consider it, the criteria around variable income and amount that can be included vary greatly. It means that borrowers with variable income will struggle to borrow as much whose earnings are more predictable, but there are still good options if you know where to look. This is where thorough affordability and criteria research can help to identify better outcomes for customers and, with Mortgage Broker Tools, brokers have access to the most comprehensive research platform available in the market for their clients – whether they earn variable income or not.”