Lender increases borrowing limits for self-employed and high LTV borrowers
Fintech mortgage lender Gen H has introduced significant adjustments to its loan-to-income (LTI) criteria, aiming to expand borrowing options for prospective homebuyers.
The changes, which take effect immediately, include raising the borrowing limit for self-employed applicants to 5.5 times their income. Additionally, loans with a loan-to-value (LTV) ratio above 85% are no longer subject to the previous cap of 4.49 times income. The threshold for the gross income-based 4.49 times LTI cap has also been lowered from £50,000 to £40,000.
According to Gen H, these updates could allow up to 12% more applicants to qualify for funding, with maximum loan amounts increasing by as much as 22%.
The lender noted that the revised criteria are expected to benefit self-employed borrowers in particular. Gen H requires two years of trading history but assesses affordability based on the most recent year, which may enable self-employed applicants to access larger loans and enter the property market sooner than they might with other lenders.
The move follows similar changes by other mortgage providers, including Skipton Building Society and Tipton & Coseley Building Society, which both announced policy changes earlier this week. These adjustments come in response to recent guidance from the Prudential Regulation Authority (PRA), which has encouraged lenders to offer more high LTI mortgages.
“I’m delighted to announce these positive changes to our loan-to-income multiples policy today” said Pete Dockar (pictured), chief commercial officer at Gen H. “Increasing our LTI limits for self-employed applicants, those with small deposits, and those on average household incomes will allow us to support exactly the people we wish to reach: those who, without Gen H, may not have found a path to homeownership.
“These buyers are often underserved by existing mortgage products and the high street, so I hope the implementation of these new rules makes our stance very clear: we’ll take every chance we get to create more incremental homeowners.”
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