First-time buyers could borrow up to £40,000 more as lenders relax mortgage rules
Tags: Residential mortgages
Quick Summary
First-time buyers may be able to borrow more than they realise as lenders relax affordability rules and launch new low-deposit mortgage schemes. Research from MAB found that half of aspiring buyers were unaware their borrowing power had improved, with some able to access £30,000 to £40,000 more than last year. Trinity Financial says buyers should compare lenders carefully, as options now include Nationwide Helping Hand, Santander’s 2% deposit My First Mortgage, Skipton’s Track Record Mortgage, NatWest’s Family-Backed Mortgage and £5,000 deposit products from lenders such as Accord and Halifax. First-time buyers should get expert advice before assuming they cannot afford to buy.
First-time buyers could borrow up to £40,000 more as lenders relax mortgage rules.
Many first-time buyers may be underestimating how much they can borrow after lenders relaxed affordability rules and launched more flexible mortgage schemes.
Research from mortgage firm MAB found that half of renters planning to buy their first home did not know their borrowing power had improved, with some applicants potentially able to borrow £30,000 to £40,000 more than they could 12 months ago. The research also found that 73% of aspiring buyers were unaware that 5% deposit mortgages are available, while 27% said saving for a deposit remains the biggest barrier to buying.
This matters because many renters are still making decisions based on outdated assumptions. Mortgage lenders have become more flexible, and some now offer higher income multiples, low-deposit products, family-backed mortgages and schemes designed specifically for renters.
For first-time buyers, the key issue is no longer just the size of the deposit. The right lender can make a significant difference to the maximum loan, the deposit needed and the monthly payments.
Which lenders have the best first-time buyer mortgage schemes?
There are now more specialist first-time buyer mortgage options than there have been for years. Trinity Financial’s first-time buyer mortgage guide highlights some of the leading schemes, including Nationwide Helping Hand, Accord’s £5,000 deposit mortgage, Halifax’s £5,000 deposit option, Skipton’s Track Record Mortgage, NatWest’s Family-Backed Mortgage and Santander’s My First Mortgage.
Nationwide Helping Hand is one of the best-known income stretch mortgages. Eligible first-time buyers may be able to borrow up to six times income, compared with lower standard affordability limits. Nationwide says Helping Hand can allow some first-time buyers to borrow more than they would under a standard mortgage assessment.
Santander’s My First Mortgage is aimed at first-time buyers with smaller deposits. Santander says applicants need a minimum £10,000 deposit, can borrow between £190,001 and £500,000, and the scheme is available up to 98% loan-to-value on a five-year fixed rate. It is not available for flats, new builds or properties in Northern Ireland.
Skipton’s Track Record Mortgage is designed for renters and offers low or no-deposit options. Skipton says applicants generally need to be aged 21 or over, have not owned a UK property in the last three years, and be able to show a strong rent payment record.
NatWest’s Family-Backed Mortgage can help borrowers use a family member or friend’s income to improve affordability, while still allowing the buyer to purchase the property in their own name.
Which lenders have the best first-time buyer mortgage schemes?
Aaron Strutt, product director at Trinity Financial, says: “Many first-time buyers do not realise how much the mortgage market has changed. Some have spoken to a lender in the past, been told they could not borrow enough, and then assumed buying was not possible.
“Lenders have become more creative. There are now 5% deposit mortgages, £5,000 deposit mortgages, 2% deposit mortgages, 100% mortgages for some renters and income stretch products offering higher salary multiples. These schemes will not suit everyone, but they can make a meaningful difference for buyers who are close to being able to purchase.
“The most important thing is not to assume every lender will offer the same amount. One bank may restrict the loan, while another building society may offer tens of thousands of pounds more. First-time buyers should get their affordability checked properly before giving up, especially if their income has risen, they have cleared debts, their deposit has increased, or lenders have changed their rules.”
Why first-time buyers should check their borrowing again
Mortgage affordability can change quickly. A buyer who could not borrow enough last year may now have more options because of lower stress rates, improved lender criteria, higher income multiples or new low-deposit schemes. The easing of regulatory rules also affects mortgage borrowing amounts.
However, borrowing more is not always the right answer. A larger mortgage usually means higher monthly payments, and first-time buyers need to be comfortable with the repayments, bills, insurance, service charges and the cost of maintaining a property.
The best first-time buyer mortgage will depend on income, deposit, credit score, employment type, property value and whether family support is available.
Speak to a Trinity Financial adviser today
The mortgage market moves fast — and the right advice can make a significant difference to the rate and deal you secure. Get in touch with our team to discuss your options.
Call Trinity Financial on 020 7016 0790 to secure a fixed or tracker rate mortgage, book a consultation, or use our appointment calendar
The information contained within was correct at the time of publication but is subject to change. It is for general information purposes and is not advice.
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Source: MAB
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