Major lender will let first-time buyers borrow up to SIX TIMES salary --[Reported by Umva mag]

A MAJOR building society is set to lend first-time buyers up to six times their income for a mortgage. Nationwide will increase the maximum loan-to-income (LTI) ratio through its Helping Hand mortgage range from tomorrow. PANationwide will now let first-time buyers borrow six times their salary[/caption] The mortgage will give people with a deposit as low as 5% the option of borrowing up to six times their income when taking a five or 10-year fixed-rate. The Society’s standard lending maximum is 4.5 times income and it has previously offered a maximum multiple of 5.5 for first-time buyers taking out a Helping Hand mortgage. Sole applicants for a Helping Hand mortgage need a minimum income of £30,000, while joint applicants need a combined income of at least £50,000. The increased maximum loan-to-income ratio means a first-time buyer couple with a joint income of £50,000 can now potentially borrow up to £300,000. Nationwide said that applications will continue to be subject to robust underwriting checks, including full assessments of credit scores and additional credit commitments. It is also increasing its maximum loan sizes for borrowers above 75% LTV (loan-to-value) – which could be of particular interest to first-time buyers as for those with a deposit as low as 5%. The maximum is being increased from £500,000 to £750,000. UK Finance data shows that around 5% of house purchase loans were for over £500,000 in the six months to June 2024. Nick Mendes, a mortgage expert from broker John Charcol, described the announcement as a “game-changer for first-time buyers”. He said: “This increased borrowing power can make all the difference for aspiring homeowners, especially in a challenging market where property prices often feel out of reach.” Meanwhile, David Hollingworth, associate director, communications at L&C Mortgages, said allowing higher borrowing amounts could address the challenges faced by first-time buyers across the UK. He added: “Building an adequate deposit is hard enough especially when the available mortgage borrowing is capped, and prices remain high. “Using the existing experience and success of Helping Hand to further enhance the maximum multiple will give more prospective first-time buyers the hope that ownership can become a reality.” Nationwide is also cutting mortgage rates from tomorrow. First-time buyer rates will be reduced by up to 0.31 percentage points and the Society will offer a sub-5% rate to borrowers with a 5% deposit. The refreshed range includes a five-year fixed-rate for borrowers with a 5% deposit at 4.99%, reduced by 0.05 percentage points. The product has a £999 fee. A 10-year fixed rate deal with no fee at 4.69%, reduced by 0.31 percentage points, will be available for people with a 25% deposit. How to get the best deal on your mortgage IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time. There are several ways to land the best deal. Usually the larger the deposit you have the lower the rate you can get. If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before. Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher. A change to your credit score or a better salary could also help you access better rates. And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now. You can lock in current deals sometimes up to six months before your current deal ends. Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost. But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first. To find the best deal use a mortgage comparison tool to see what’s available. You can also go to a mortgage broker who can compare a much larger range of deals for you. Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender. You’ll also need to factor in fees for the mortgage, though some have no fees at all. You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term. You can use a mortgage calculator to see how much you could borrow. Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file. You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements. What will other bank

Sep 23, 2024 - 15:06

Major lender will let first-time buyers borrow up to SIX TIMES salary --[Reported by Umva mag]

A MAJOR building society is set to lend first-time buyers up to six times their income for a mortgage.

Nationwide will increase the maximum loan-to-income (LTI) ratio through its Helping Hand mortgage range from tomorrow.

a red sign that says kfh on it next to a yellow sign that says savills

Nationwide will now let first-time buyers borrow six times their salary[/caption]

The mortgage will give people with a deposit as low as 5% the option of borrowing up to six times their income when taking a five or 10-year fixed-rate.

The Society’s standard lending maximum is 4.5 times income and it has previously offered a maximum multiple of 5.5 for first-time buyers taking out a Helping Hand mortgage.

Sole applicants for a Helping Hand mortgage need a minimum income of £30,000, while joint applicants need a combined income of at least £50,000.

The increased maximum loan-to-income ratio means a first-time buyer couple with a joint income of £50,000 can now potentially borrow up to £300,000.

Nationwide said that applications will continue to be subject to robust underwriting checks, including full assessments of credit scores and additional credit commitments.

It is also increasing its maximum loan sizes for borrowers above 75% LTV (loan-to-value) – which could be of particular interest to first-time buyers as for those with a deposit as low as 5%.

The maximum is being increased from £500,000 to £750,000.

UK Finance data shows that around 5% of house purchase loans were for over £500,000 in the six months to June 2024.

Nick Mendes, a mortgage expert from broker John Charcol, described the announcement as a “game-changer for first-time buyers”.

He said: “This increased borrowing power can make all the difference for aspiring homeowners, especially in a challenging market where property prices often feel out of reach.”

Meanwhile, David Hollingworth, associate director, communications at L&C Mortgages, said allowing higher borrowing amounts could address the challenges faced by first-time buyers across the UK.

He added: “Building an adequate deposit is hard enough especially when the available mortgage borrowing is capped, and prices remain high.

“Using the existing experience and success of Helping Hand to further enhance the maximum multiple will give more prospective first-time buyers the hope that ownership can become a reality.”

Nationwide is also cutting mortgage rates from tomorrow.

First-time buyer rates will be reduced by up to 0.31 percentage points and the Society will offer a sub-5% rate to borrowers with a 5% deposit.

The refreshed range includes a five-year fixed-rate for borrowers with a 5% deposit at 4.99%, reduced by 0.05 percentage points. The product has a £999 fee.

A 10-year fixed rate deal with no fee at 4.69%, reduced by 0.31 percentage points, will be available for people with a 25% deposit.

How to get the best deal on your mortgage

IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.

There are several ways to land the best deal.

Usually the larger the deposit you have the lower the rate you can get.

If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.

Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.

A change to your credit score or a better salary could also help you access better rates.

And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.

You can lock in current deals sometimes up to six months before your current deal ends.

Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.

But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.

To find the best deal use a mortgage comparison tool to see what’s available.

You can also go to a mortgage broker who can compare a much larger range of deals for you.

Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.

You’ll also need to factor in fees for the mortgage, though some have no fees at all.

You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.

You can use a mortgage calculator to see how much you could borrow.

Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.

You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.

What will other banks lend based on your salary?

Lloyds, Halifax and Santander let customers borrow five and a half times their earnings.

Halifax recently reduced the minimum income threshold to £50,000 to qualify.

The multiple increased from a loan-to-income ratio of 4.49.

Based on a household income of £50,000 and a deposit of 10%, this increased the maximum loan available from £224,500 to £275,000.

To qualify, and subject to affordability, customers must apply for a first-time buyer mortgage with Lloyds Bank or its sister brand Halifax, have a total employed household income of £50,000 or more, have a deposit of at least 10% and not be using shared ownership or shared equity schemes.

Santander offers five and a half times, but only for those with a combined income of £75,000 or more.

This is also only applicable where the Loan to Value (LTV) is less than 85%.

On the other band, HSBC varies its multiples based on LTV and income levels, with higher multiples reserved for those earning over £100,000.

Of course, it’s important to keep in mind that not all mortgages are available to first-time buyers and some require really high annual salaries, which makes it unlikely that they’re within reach for those who haven’t yet bought their first home.

It’s also crucial to remember that all banks will take other things into consideration too, and as always, they’ll conduct affordability checks before they approve loans.

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