Leeds Building Society has released a mortgage that will lend up to five-and-a-half times income to first-time buyers, which it said could boost loan amounts by £66,000.
The Income Plus mortgage is open to first-time buyers with a minimum income of £40,000 and offers a higher loan-to-income (LTI) ratio than the standard four-and-a-half times earnings.
The mutual said this could see a first-time buyer access a loan of up to £356,000, compared to £290,000 under its standard lending.
Rates on the five-year fixed product begin at 4.4% at 75% loan to value (LTV) with a £999 fee, up to 5.15% at 95% LTV with no fee. The product also includes a free standard valuation up to £999.
It is available to single and joint applicants, including self-employed borrowers, up to 95% LTV. This includes new-build houses, while lending on new-build flats is capped at 85% LTV.
The Income Plus mortgage can also be combined with Leeds Building Society’s existing green mortgage, which offers a lower rate on a new-build home with an Energy Performance Certificate (EPC) rating of A or B.
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The product will only be available through the mutual’s intermediary partners on its MSO platform Mortgage Hub.
Leeds Building Society has also developed an affordability calculator for first-time buyers to identify any additional lending that may be available.
Martese Carton, director of mortgage distribution at Leeds Building Society, said: “The launch of Income Plus and other improvements we’re making will come as welcome news for many of our intermediary partners across the UK, who work really hard to support the increasing number of first-time buyers facing affordability constraints.
“By combining a high loan to value and loan to income with generous but responsible affordability modelling, it supports intermediaries in helping overcome some of the main barriers facing would-be homeowners: earnings being outstripped by house prices and the difficulty of saving a large deposit.”
She added: “Our partners can offer clients advice built on certainty and access enhanced availability of lending options, as we demonstrate that every yes matters – to intermediaries, to first-time buyers and to us as a lender.
“Understanding the pressures the intermediaries are facing, we are proud to launch our new product along with a dedicated affordability calculator to make supporting the needs of their clients as straightforward as possible.”
Supporting first-time buyers
This change follows Leeds Building Society’s decision to stop providing mortgages for second residential homes, and its move to stop new holiday let lending in select areas for a 12-month trial period to focus on lending to first-time buyers.
The mutual also partnered with Experian to connect to its Boost service, which can improve a person’s chance of getting a mortgage by considering their financial history.
David Hollingworth, associate director at L&C Mortgages, welcomed the launch, saying: “Leeds Building Society is a lender that puts first-time buyers at the heart of its proposition, and the introduction of Income Plus should help more advisers’ customers take the first step onto the ladder.
“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.”
