HSBC, Halifax and Nationwide make changes to loan-to-income multiples
HSBC, Halifax and Nationwide for Intermediaries are the latest lenders to change their loan-to-income mortgage calculations.
HSBC for Intermediaries has announced applicants will need to earn between £50,000 and £100,000 to get 4.75 x salary mortgages. Previously applicants needed to earn between £40,000 and £100,000 to get 4.75 times their salary.
Halifax is changing the loan to income caps applied as part of its affordability calculations. For borrowers with incomes of more than £75,000, where the loan-to-value is between 85%-90% and the loan amount is below £500,000, the loan-to-income is being increased from 4.49 x to 4.75 x salary.
Nationwide for Intermediaries initially launched its Helping Hand scheme to enable first-time buyers to borrow up to 5.5 times their salary. They initially specified sole applicants need to earn £31,000, rising to £50,000 for joint applicants to qualify. This has increased to £37,000 for sole applicants rising to £55,000 for joint applicants. These mortgages are still not available to self-employed borrowers.
How do lenders work out how much you can borrow?
Mortgage lenders use affordability calculators to determine how much applicants can borrow, and maximum loan sizes often change depending on the amount someone earns.
Aaron Strutt, product director at Trinity Financial, says: "If you are a higher earner or a professional like a doctor, dentist or lawyer, it is possible to borrow 5.5 times salary although monthly credit commitments like loans and cars on finance typically reduce the amount you can borrow."
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