Lenders Expand Mortgage Options with Higher Income Multiples

The mortgage market continues to evolve as lenders adjust their criteria to support homebuyers with increased borrowing options. Recent announcements from Loughborough Building Society, Nationwide, NatWest, and Marsden Building Society reflect to a point to move towards more flexibility, especially for borrowers who are trying to maximise their loan-to-income (LTI) ratios.

Nationwide's Helping Hand Scheme

Nationwide continues to support first-time buyers with its Helping Hand Scheme, which boosts the maximum loan-to-income (LTI) ration to 6x income for eligible applicants. 

• Available on 5 and 10 year fixed-rate mortgages.
• Maximum LTV of 95%.
• Income criteria :
  - Single applicants must earn £40,000+ annually.
  - Joint applicants must earn £55,000+ combined.

Helping Hand is not available for:

• Self-employed applicants.
• Interest-only payments.
• In conjunction with other schemes or non-standard ownership, for example: Shared ownership, Help to buy.

Eligible first-time buyers can potentially borrow up to 33% more than standard affordability calculations, which ultimately provide greater financial flexibility. 

As an example - Single buyer earning £45,000

• Standard max borrowing (4.5x): £202,500
• With Helping Hand (6x): £270,000

That's an extra £67,500 of potential borrowing power, which could make a massive difference in accessing properties, particularly in competitive markets.

NatWest Increase Loan-to-Income Ratio to 5.5x income

NatWest has raised its maximum LTI ratio to 5.5x income, offering increased borrowing power for higher earners. Especially those aiming to stretch affordability a bit further.

• Applicants need to earn minimum of £75,000 (single) or £100,000 (joint) annually.
• Maximum LTV of 90%, which means you will need at least a 10% deposit.
• Applies only to capital repayment mortgages.
• Available whether you are buying your first home or looking to move.

High-income borrowers who want to obtain larger loans with more reasonable repayment plans may especially benefit from this new change.

It is possible for those earning above £40,000 to borrow 5x income with a maximum LTV of 90%. This makes NatWest relatively competitive, especially for professionals just under the higher earner threshold.

Loughborough Extends 5.5x Income to 95% LTV

Loughborough Building Society had enhanced its mortgage offering by extending its 5.5x income multiple to loans with a 95% loan-to-value (LTV). This move allows borrowers to access higher loan amounts with a smaller deposit, making it easier to become a homeowner, especially where some family help is needed to get onto the property ladder.

Available under the Joint Borrower Sole Proprietor (JBSP) scheme, enabling family members to help with affordability without being legal owners of the property.

Criteria is aimed at boosting: 

• Self-employed borrowers, who can now potentially use their latest year's accounts rather than needing an average of two or three years. This is a big win for those whose income has recently increased.
• Higher-income applicants looking for more flexible mortgage options (for example, stretching affordability or working around some historical credit hiccups).

Retaining flexibility on credit history:

• Defaults and CCJs (County Court Judgements) are disregarded if:
  - Default is over 2 years old (and resolved)
  - CCJ is over 3 years old (and settled)
• Special leeway for lower-level defaults: Telecoms, mail order, utilities, or bank account defaults can be ignored if resolved at least 3 months before applying. 

This is far more forgiving than many mainstream lenders.

What Sets Loughborough's New Criteria Apart?

• Self-employed borrowers get a fairer shot- If your income fluctuates or has grown recently, Loughborough now considers your latest year's earnings, rather than averaging multiple years. That means you could qualify for a bigger loan if you've had a strong year.
• Minor credit issues won't instantly disqualify you- If you've had telecom, utility, or mail-order defaults that have been resolved for at least 3 months, Loughborough may disregard them entirely. Even older CCJs (over 3 years) and defaults (over 2 years) won't necessarily be deal-breakers. 
• High-income applicants can access more borrowing power- With 5.5x income lending and up to 95% LTV, this gives high earners a way to stretch affordability without unrealistic barriers.

✅JBSB (Joint Borrower Sole Proprietor) buyers get more options- If you're getting financial support from a family member (but don't want them to co-own the property), Loughborough's JBSP mortgages combined with these new policies can help secure a bigger loan. 

Marsden Relaxes Residential Lending Criteria

Marsden Building Society has also introduced more flexible lending policies across several key areas, assisting more borrowers.

Key updates include: 

• Applicants earning over £75,000 (single) or £100,000 (joint) can now borrow up to 5.5x income - an increase from the previous 4.5x cap.
• Mortgages are now available for second homes intended for immediate family use or as personal holiday properties, with borrowing allowed up to 75% loan-to-value (LTV).
• Up to four family members can now apply for a residential mortgage together, provided they are immediate family. This is available up to 80% LTV, with a maximum age of 90 at the end of the mortgage term.
• Properties with up to 30 acres are now eligible for mortgages up to 80% LTV, as long as there's no commercial use, agriculture tenancy, or agricultural tie. 
• Professional sportspeople can now apply for mortgages up to 80% LTV, with a maximum retirement age of 40. However if adequate investment income or clear post-retirement earnings can be shown, borrowing beyond this age may be considered.

With these changes, applicants who would have previously been restricted, especially those with non-standard income structures, will have more opportunity to obtain loans.

What Does This Mean for Borrowers?

According to these lenders' most recent updates, the market is moving towards higher income multiples, larger LTV allowances and more flexibility in terms of affordability.
These improvements are particularly significant for first-time buyers and high-income borrowers, opening more possibilities when securing a mortgage.

If you are considering your next property move, speaking with a mortgage expert can help you navigate these changes and find the best option for your situation. At Brooklyns Financial, we're here to guide you through the latest lending criteria and help you secure the right deal.

For initial consultation, speak with our experts or call us on 01628 56463. We're here to help you navigate your mortgage journey with informed advice and care.

Your home may be repossessed if you do not keep up repayments on your mortgage. 
The information contained within was correct at the time of publication but is subject to change. 

Sources: Mortgage Strategy, Nationwide for Intermediaries