Lender introduces higher income multiples and considers rental history in affordability assessments
Suffolk Building Society has revised its lending policy to allow first-time buyers to borrow up to 5.49 times their income, provided they can show a consistent rental payment history.
The change, effective immediately, marks the first time the lender has factored rental history into its affordability checks.
Applicants must demonstrate they have paid rent for at least 12 months at a level within 10% of their expected new mortgage payments. For instance, a couple currently paying £1,500 per month in rent could be eligible for a mortgage with monthly payments up to £1,650.
The enhanced income multiple of 5.49 also applies to applications where at least one applicant earns more than £75,000, lowering the previous threshold from £100,000.
The move follows similar changes by other mortgage providers, including mutual lenders such as Skipton Building Society and Tipton & Coseley Building Society, which both announced policy changes last month. These adjustments come in response to recent guidance from the Prudential Regulation Authority (PRA), which has encouraged lenders to offer more high loan-to-income mortgages.
“We’re really excited to take rental history into account for the first time, as well as join a very small group of lenders who are offering meaningful support to first-time buyers,” said Charlotte Grimshaw (pictured right), head of intermediaries at Suffolk Building Society.
“Many renters have the means to meet sizeable monthly mortgage repayments – often paying more than they would on a mortgage, while renting. However, a multitude of factors, such as rising house prices and higher rents has meant customers can often afford to rent or save for a deposit, but rarely both.
“The current situation has put homeownership out of reach for many. The enhanced income multiples, when combined with other affordability-boosting tools, such as five-year fixed rates, or longer terms to reduce monthly payments, should help some of our renters achieve their dream of buying a home.”
Suffolk Building Society has also introduced several other changes to its criteria, including permitting capital raising to purchase a property without simultaneous completion, up to a maximum of 80% loan-to-value. This adjustment is designed to support scenarios such as older borrowers preparing for retirement or those buying an investment property.
Additional updates include allowing capital raising to buy an onward property in a limited company and permitting deposits sourced from an applicant’s limited company (special purpose vehicle) for property purchases.
“We’re always reviewing our criteria and taking broker feedback on board to see what changes we could make to improve our overall proposition,” Grimshaw said. “Our focus is always on fulfilling the needs of those customers we’re trying to reach.”
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