Want to purchase your own home but unable to save a large enough deposit to secure a mortgage that falls within four and a half times your annual income? Or is the house you love slightly outside your mortgage reach? It could now be a lot easier for you to borrow a larger mortgage.
A recent change to an obscure rule by The Bank of England means it could now be easier for mortgage borrowers to get a mortgage of more than four-and-a-half times their annual income. The rule change applies immediately and effectively loosens the cap placed on the amount of high loan-to-income mortgage lending banks and building societies can do.
Lender’s mortgage offers of more than 4.5 times income was limited to 15% by the PRA in every quarter – this has now changed to a 15% limit on completions over a one-year period rather than just the three months. This gives lenders much more flexibility to get closer to the 15% limit if they wish to because it allows them to plan better and manage their limit more easily. This means they will not need to be as overly cautious when contemplating the larger loans in case they breach their fixed quarterly level.
The change will mean that about 10% more borrowers will be able to have a mortgage in excess of 4.5 times their income. We expect to see a more smooth and manageable process, with the change reducing the likelihood of lenders shutting down deals in panic when they get close to the 15% limit.
If you are interested in buying your first home and need advice and support – call First Financial Solutions on 01639 262222 or click here to contact us.
We can help you through the process, explaining everything clearly along the way to ensure purchasing your first home is as exciting as it should be!