Building societies making bigger mortgages more accessible
Mortgage borrowers could find it easier to access bigger loans under changes announced by building societies.
Both Leeds Building Society and Yorkshire Building Society have announced changes.
Yorkshire Building Society has launched new higher loan-to-income (LTI) mortgage options for customers who apply direct to the lender.
The new “income lifter” offering will enable first-time buyers to borrow up to 5.5 times their income with a 5% deposit, if their household income is at least £50,000. Non first-time buyers can borrow at up to 90% LTV (loan-to-value), the society said.
Earlier this month, the society reduced its minimum household income threshold for people borrowing up to five times their income, from £75,000 to £50,000.
Ben Merritt, director of mortgages for Yorkshire Building Society, said: “We know from experience that many people can well afford to borrow more than 4.5 times their income to secure their desired home, and now we can help more of them do just that.”
Meanwhile, Leeds Building Society said it is lowering the minimum household income needed to borrow more than 4.5 times annual income.
Joint or single applicants earning £30,000 per year will now be able to apply for a mortgage at that level with the lender. The amount has been reduced from £40,000.
Earlier in July, it emerged that lenders could have the ability to offer more mortgages at high loan-to-income levels, if they choose to.
The Bank of England said its Financial Policy Committee (FPC) had discussed the current operation of its LTI limits.
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
Go to website
ADVERTISEMENT
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
Go to website
ADVERTISEMENT
The developments mean that individual lenders may choose to have more than 15% of their lending at a high LTI ratio. Different lenders will have different risk appetites.
Leeds said the changes on minimum income include 5% deposit mortgages and its “income plus” range which is designed specifically to support first-time buyers.
Leeds Building Society’s director of mortgages and savings, Matt Bartle, said: “We welcomed the decision to consider allowing more high loan-to-income on a lender-by-lender basis and are very pleased to have gained the Bank of England’s permission.
“Lowering our minimum income requirements brings the dream of homeownership a step closer for more borrowers, including many earning below national average earnings.
“We understand the importance of being a prudent and responsible lender. We carry out detailed affordability checks to make sure borrowers can realistically afford repayments and not over-extend themselves financially.”
Applicants can make appointments direct with Leeds or apply through brokers.
