A BUILDING Society has launched a new mortgage range to help first-time buyers borrow £52,000 more .
Leeds Building Society is increasing the amount first-time buyers can potentially borrow as a multiple of their earnings through its new Income Plus range.
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Aspiring homeowners with a minimum household income of £40,000 may now be able to borrow up to 5.5 times their earnings.
Its previous maximum loan-to-income ratio was 5.25 for first-time buyers and 4.5 on its standard mortgage lending to other borrowers.
Based on its lending during the spring and summer this year, the society estimates that first-time buyers could potentially borrow up to £52,000 more on average compared with its previous maximum loan-to-income ratio for this group.
It said it has also made improvements in assessing how much borrowers can afford to repay.
Single and joint borrowers, including those who are self-employed, will potentially be eligible for the society’s new Income Plus mortgages, with a minimum 5% deposit needed or a 15% deposit for new-build flats.
The deals will be available through brokers and intermediaries and they are all five-year fixed-rate products.
The products include a mortgage at 4.4% for borrowers with a 25% deposit, with a £999 product fee, as well as a deal at 5.19% for borrowers with a 5% deposit, with no fee.
David Hollingworth, associate director at L&C Mortgages, said: “We know that first-time buyers are not only grappling with building a deposit but also with the affordability constraints that high house prices bring.
“Income Plus seeks to address this by providing an alternative option for those with a smaller deposit but importantly also enabling a higher borrowing amount for those that can demonstrate it will be affordable.”
Meanwhile, Rachel Springall, a finance expert at Moneyfacts, said mortgages like this give buyers “a better chance of getting a foot on the property ladder.”
“Stretching a deposit is a key issue for buyers who are faced with a dwindling stock of affordable housing, which will take time to improve,” she added.
“Product innovation or enhancement should be celebrated and support for new buyers will be integral to keep the mortgage market moving.”
Full list of products available in the Income Plus range
Below, we have put together a full list of the products available in the new full-time buyer range from Leeds Building Society.
It includes the interest rate, loan-to-value (LTV), product fee, if there is a cashback offering and valuation costs.
The LTV is the percentage amount of the property that is mortgaged and the amount that is owned by you.
A product fee is charged by lenders for arranging a mortgage.
It may also be referred to as an arrangement fee or booking fee.
Some lenders offer cashback as incentive where a certain amount of money is given back to the borrower upon completion of the mortgage deal.
Meanwhile, valuations refer to the process of assessing the value of a property by a professional valuer or surveyor.
To find which deal would be best for you, 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.
Income Plus five-year fixed rate mortgage at 95% loan-to-value – 5.19%
- Fee-free
- Free standard valuation up to £999
Income Plus five-year fixed rate mortgage at 95% loan-to-value – 5.15%
- £999 product fee
- £500 cashback to spend on moving costs
- Free standard valuation up to £999
Income Plus five-year fixed rate mortgage at 90% loan-to-value – 4.95%
- Fee-free
- Free standard valuation up to £999
Income Plus five-year fixed rate mortgage at 85% loan-to-value – 4.74%
- Fee-free
- Free standard valuation up to £999
Income Plus five-year fixed rate mortgage at 85% loan-to-value – 4.64%
- £999 fee
- Free standard valuation up to £999
Income Plus five-year fixed rate mortgage at 80% loan-to-value – 4.54%
- £999 fee
- Free standard valuation up to £999
Income Plus five-year fixed rate mortgage at 75% loan-to-value – 4.40%
- £999 fee
- Free standard valuation up to £999
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 other first-time buyer mortgages are out there?
Several lenders have announced initiatives aimed at helping first-time buyers.
These include small or no deposit mortgages, higher earnings multiples and more ways families can help get relatives onto the housing ladder.
Skipton Building Society’s Track Record mortgage offers you a no-deposit option if you can show you have been paying rent for a year or more.
Another option if you only have a small deposit is Yorkshire Building Society’s £5,000 deposit mortgage.
It only requires a deposit of £5,000, which could mean borrowing as much as 99% of the property value as it is available on properties costing over £100,000 and up to £500,000.
The Helping Hand option at Nationwide lets eligible first-time buyers borrow up to six times their income – ideal for those on smaller incomes or looking to buy in pricey areas like London.
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