Several lenders have made their mortgages more accessible in recent weeks, boosting borrowers’ chances of buying a home.
Nationwide Building Society has reduced its minimum income requirement on its Helping Hand initiative from £40k to £35k. The scheme enables first-time buyers with a 5% deposit to borrow up to six times their income on 5-year or 10-year fixed rates. This is 33% more than the building society’s standard lending limits. The minimum income requirement for joint applications remains unchanged at £55k.
Henry Jordan, Nationwide’s director of home, said: “Helping Hand has proven extremely popular with prospective homeowners, especially since we extended it to six times income, and we continue to provide as much support as possible, whilst remaining within the high loan-to-income lending regulations.”
However, the building society says it still wants to see a review into regulations that mean no more than 15% of banks and building societies’ new loans can be to customers borrowing at or above 4.5 times their income.
Nationwide’s move follows changes introduced by Santander at the end of March to enable customers to borrow more. The bank reduced its affordability stress test rates by up to 0.75%, taking them to their lowest level for three years. The changes mean that customers applying for a mortgage from Santander can now borrow up to £35,000 more than they could previously, although this depends on their individual circumstances and loan to income limits.
Right to Buy
Right to Buy mortgage customers have also received a Spring boost, with Barclays introducing a zero deposit mortgage for Right to Buy applicants. Right to Buy is a Government-backed scheme which is designed to help local authority tenants buy the property they live in at a discounted price.
Barclays said it will use the Right to Buy discount in place of a deposit. That means someone who receives a 40% discount under the scheme will be considered to have a 40% deposit and will therefore be able to access mortgages for those borrowing up to 60% of the property value.
Lee Chiswell, head of mortgages at Barclays said; “The Right to Buy scheme has long been a crucial route to home ownership for council and housing association tenants, yet we know that saving for a deposit remains a key obstacle. By lending the full value of the property, we’re removing the need for buyers to have any deposit at all, helping many completely sidestep the largest barrier to home ownership.”
