New lender providing homebuyers with 5.5 times salary mortgages
Loughborough Building Society is the latest lender to start offering up to 5.5 times salary mortgages.
The lender has increased its upper lending cap from 4.5 to 5.5 x income for borrowers who meet its affordability tests.
In order to qualify for the higher income multiple cap, borrowers must earn at least £50,000 if they are applying individually or a total of at least £75,000 if they are making a joint application.
Aaron Strutt, product director at Trinity Financial, says: “Our brokers have access to a few lenders offering mortgages between five- and six-times salary.
"Applicants typically need to earn over £75,000 to qualify for income stretch mortgages or be working as a professional... they like dentists, doctors and lawyers.”
For borrowers who meet these requirements, Loughborough offers a two-year discounted rate with a £999 arrangement fee. The deal is available if you have a 15 per cent deposit and there is a maximum loan size of £750,000.
Are the rates more expensive for income stretch mortgages?
If you are looking for an income stretch mortgage and you qualify with one of the bigger banks, the lender will not charge a premium for the enhanced affordability calculation.
If you apply to one of the smaller building societies offering bespoke income stretch mortgages, the lenders may well charge a premium and potentially a higher arrangement fee.
Are they riskier?
If you take an income stretch mortgage there is a risk that you may struggle to switch to another provider once your rate finishes.
Some of the niche lenders do not provide competitively priced product transfer rates to allow borrowers to switch to other lenders, so they are relying on them to offer a competitively priced deal once their product expires.
If your income increases and you pay off some of the outstanding balance, you will find it easier to remortgage. One high street bank has launched a mortgage enabling borrowers to complete like-for-like remortgages using up to 5.5 times salary and there is no minimum income requirement.
Call Trinity Financial on 020 7016 0790 to secure an income stretch mortgage
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