TSB has become the latest lender to shake up its borrowing criteria to permit some cash-strapped first-time buyers and homeowners to obtain bigger mortgages. Can you benefit?
The bank has increased its loan-to-income multiple cap from the typical 4.5 to 4.75, but only for applicants which have a salary of lb40,000 a year or more.
TSB has additionally doubled the utmost it's prepared to lend on its existing two, three, five and 10-year fixed-rate 90% and 95% mortgages from lb250,000 to lb500,000 – giving those who work in pricier areas more choice.
Here, we check out how these changes could improve your borrowing power, and provide advice on the steps you can take to locate a bigger loan if you do not qualify.
How much can you borrow from TSB?
The change to TSB's residential mortgage criteria means all borrowers with a single or joint salary of at least lb40,000 will be able to borrow 4.75 times their annual income, rather than the standard of four.5 times.
The changes mean that a single buyer without any dependents earning lb40,000 a year could get a loan of up to lb190,000, rather than lb180,000. That’s an extra lb10,000 to help fund your home purchase or remortgage.
Alternatively, two applicants having a combined joint income of lb100,000 would be able to qualify for financing as high as lb475,000 instead of lb450,000 – theoretically giving them lb20,000 more to utilize.
TSB head of mortgages Nick Smith says: 'Increasing our loan-to-income cap and maximum loan size on selected products is all about being able to give customers more flexibility on their own borrowing needs whilst still meeting our affordability criteria.'
Who offers the biggest mortgages?
When purchasing a property, along with saving a healthy deposit you’ll have to consider how much you will be able to gain access to to fund the purchase.
The amount you are able to borrow will be different according to each lender's criteria and just what it thinks you really can afford to repay. Providers will appear at the income and certain outgoings like repayments on existing debts and childcare to determine how much it’ll offer you.
Typically, many lenders will help you to borrow no more than four-and-a-half times your annual income.
However, some lenders are adjusting their criteria to help those can not pass tough affordability assessments.
Some banks will now lend up to 5.Five times salary if you are in a certain profession. For example, Clydesdale Bank offers higher income multiples for occupations including barristers, dentists and solicitors.
But even if your work doesn't cause you to eligible to borrow more, you may be able to find some lenders provides you with a larger loan if you earn on the specific amount.
Barclays, for instance, will offer those with a deposit of 20% along with a salary of at least lb30,000 a mortgage of up to five times their annual income.
5 ideas to improve your borrowing power
Lenders need to abide by strict affordability rules to make sure they only lend an amount that borrowers find affordable to repay both now as well as in the near future.
But this could make it tough for those on lower salaries or with small deposits to get to the property ladder.
If you're struggling to make the figures add up, below are great tips on increasing your borrowing power.
1. Compare providers
You can use online calculators supplied by mortgage brokers to check just how much you likely will have the ability to borrow based on your needs. This can give you an idea as to which banks might provide the most. Our studies have shown the amount you’re offered could vary by as much as lb22,500 depending on the lender you choose.
2. Reduce outgoings and debt
Reducing your outgoings can help improve your affordability and boost the amount you can borrow. In some cases, paying down a number of your credit debt can improve your borrowing capacity as well.
3. Consider using a longer term
Taking out a home loan over a longer period can help you meet the affordability requirements and for that reason boost your borrowing limits.
Extending the term from 25 to 30 or perhaps 40 years, for example, can lead to much lower repayments and greater affordability.
4. Look at specialist deals
Some lenders offer bigger loans to applicants that have particular occupations. You may also be able to borrow more by utilizing special products for example guarantor mortgages.
5. Seek personal advice from an expert
A professional mortgage adviser will possess detailed understanding of lenders and the criteria they’ll use to evaluate your mortgage application.
A good broker may also be in a position to survey the entire market and discover which lenders will offer you the right loan based on your individual circumstances.
