MBT Affordability Insights: New ways to keep up with rising house prices

There was a time, not that long ago, where 5 times income was quite rare in the mortgage market, generally only available to clients with six-figure salaries. Help to Buy enabled applicants to borrow effectively over this figure and Help to Buy London even higher. But Help to Buy is now restricted to first-time buyers and new build properties, with regional caps.

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Mortgage Broker Tools
30th September 2021
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"There is now a way of obtaining up to 6 times income for first-time buyers and home movers, new build and second hand, up to a maximum price of £600k and, importantly, up to 95% LTV."

However, it is possible for clients, who meet certain minimum income requirements, to obtain 5.5 times income up to 90% LTV with three different lenders! And there is now a way of obtaining up to 6 times income for first-time buyers and home movers, new build and second hand, up to a maximum price of £600k and, importantly, up to 95% LTV.

It is a type of shared equity scheme from a company called Proportunity, which has teamed up with three lenders so far, most notably being Halifax.

A recent case study has shown that a new applicant with a 5% deposit on a £60k salary, who would ordinarily only be able to buy a property for £290,000, can go up to a price of £385,000 using the scheme. The average interest rate is less than a normal 95% rate and, whilst the total monthly cost is of course higher, it is still affordable.

Halifax takes the Proportunity loan as a monthly commitment and the client is free to remortgage at the end of the two-year fixed term as appropriate, thus providing brokers with an opportunity to review whether their clients could benefit from refinancing at this stage. This helps to maintain a more regular dialogue with the client and potentially opens the door to more new business opportunities.

To compare, Nationwide’s Helping Hand Mortgage would allow a purchase price in theory of £367,000 for this case. But, of course a 10% deposit would be required and the rate would be fixed quite high for five years. It is also restricted to first-time buyers only and does not allow self-employed applicants.

So, as we can see, the market at the top end of affordability is growing all the time, with more inventive solutions becoming available. The great news for brokers is that technology is keeping pace with these developments and affordability platforms, like MBT Affordability, are now able to provide results for combined solutions like these, making it so much easier for brokers to find the best option for their clients.

 

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