Nationwide raises mortgage income multiple to 6x salary on Helping Hand scheme
Nationwide Building Society for Intermediaries has increased the income multiple first-time buyers can borrow using it's 'Helping Hand' mortgage when they take a longer-term fix.
The building society has raised the mortgage income multiple from 5.5x salary to 6x salary. According to Nationwide, first-time buyers could now borrow up to 33% more.
The 'Helping Hand' mortgages are available to employed borrowers who opt for one of Nationwide’s five or ten-year fixed rates. The mortgage must be taken on full capital repayment, and to Nationwide, this means you cannot have had a mortgage in the last three years. If applying jointly, both applicants need to be first-time buyers.
The minimum income requirement is £30,000 for sole applicants and £50,000 for joint applicants. All income sources (except self-employed income) can be included.
Aaron Strutt, product director at Trinity Financial, says: "Nationwide must think that first-time buyers need a lot more help to push up the income multiple to six times salary. It is quite a jump from the lender's normal lending policy.
"If a first-time buyer takes a six times salary mortgage, they need to be aware they may struggle to remortgage to another lender unless they get a pay rise or other lenders offer more generous affordability rules."
There is a fair chance Nationwide would not have increased the mortgage income multiple if Halifax had not recently offered a similar scheme to provide mortgages to first-time buyers. With the Halifax scheme, borrowers also have the choice of two-year fixes at 5.5 times salary, rather than five or ten-year fixes.
Accord Mortgages improves £5k deposit product
Accord Mortgages is also enhancing its offering to first-time buyers and other borrowers with a smaller deposit, reducing rates across its residential range by up to 0.55%.
The £5K Deposit Mortgage, launched in March to enable first-time buyers with just a £5,000 deposit to purchase a property valued up to £500,000, is reducing by 0.45% to just under 5.8% - the second price cut to this product in the last month and its lowest rate so far.
Call Trinity Financial on 020 7016 0790 to secure a mortgage, book a consultation, or complete our mortgage questionnaire.
The information contained within was correct at the time of publication but is subject to change.
Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage
Be a first time buyer. This means you will not have had a mortgage in the last 3 years. If applying jointly, both applicants need to be first time buyers.
- Have at least 5% deposit.
- Take out a 5 or 10 year fixed rate mortgage.
- Be employed and not self-employed.
- Lloyds Banking Group makes £2bn* lending available to first-time buyers borrowing between 4.5x salary and up to 5.5x salary
- New loan-to-income ratio designed to boost maximum mortgage loan sizes
- Up to 22% additional lending with First Time Buyer Boost scheme
Some banks and building societies offer six times salary mortgages including Kensington, potentially Tipton, plus the Teachers Building Society. There is a much wider selection of lenders offering 5.5 times salary mortgages including Santander, Halifax, Barclays and HSBC.
The Nationwide six times salary change really will make a difference to first-time buyers seeking more generous mortgages. Lenders use mortgage affordability calculators to calculate how much applicants can borrow. Like other banks and building societies, they will reduce the maximum loan size when applications have credit cards, loans, kids or car finance.
As a first-time buyer, opting for a five-year fix makes sense, although taking a ten-year fix could be a bit too long.
While ten-year fixes provide payment security, rates change a lot over a decade, so borrowers could pay more if rates come down over the longer term.
The idea is that borrowers purchase a property, pay off some of the mortgage balance and house prices increase. This puts homeowners in a positive to remortgage or move home if the want to. Ten-year fixes also tend to have higher early repayment charges.
One of the benefits of the Halifax first-time buyer scheme is they can opt for a two-year fix and potentially borrow 5.5 times their salary.
It is good news that Nationwide has acted to provide more generous mortgages because affordability issues have got even worse especially for first time buyers trying to get on the property ladder in places like London and Surrey.
We are at the stage where the UK’s biggest building society is having to offer first time buyers income stretch mortgages to help them get on the property ladder. Without options like this they either have no chance of buying in their preferred area or they need even more help from the Bank of Mum and Dad. Most of the big lenders are normally very cagey about offering six times salary and 5.5 times salary is only normally available to higher earners.
The price hikes brought on by the mini budget and high base rate have made life very difficult for many first time buyers and they have not need been able to borrow anywhere near enough money to get on the property ladder.
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