The lender offers to lend at a rate of 6.5 times the borrower’s income, which is much higher than the 4.5 offered as standard and even versus the 5.5 or 6 offered by more competitive lenders.
It is offered by Coventry Brokers, a branch of the Building Society that works through brokers. Therefore, first-time buyers who take advantage of this offer will need to hire an advisor.
These calculations will apply to eligible customers, on residential purchases up to 95% loan-to-value (LTV), Coventry said.
The enhanced loan-to-income (LTI) multiples recognize that borrowing power can be just as important as saving for a deposit for many first-time buyers, she said.
Kevin Purvey, Mortgage Distribution Director at Coventry Building Society, said: “We know that many first-time buyers have strong incomes, but their borrowing power is not stretched far enough to buy the home they want. By giving eligible customers the opportunity to borrow up to 6.5 times their income, we are helping more people to take that first step on the property ladder.”
Lenders offer high loan-to-income loans
Aaron Strutt, product and communications director at Trinity Financial, said this was not something he expected Coventry would start offering, but it showed how keen lenders were to attract more first-time buyers and make it easier to get a mortgage large enough to buy the property they want.
He said: “More banks and building societies are offering mortgages at 5.5 and six times the individual and joint salary, but most do not extend to 6.5 times the salary.”
One of the most popular “six times salary” programs is the Nationwide mortgage. HSBC and NatWest also offer a salary equivalent to 6.5 times salary for applicants earning more than £100,000 and £150,000 respectively.
Newcastle, Barclays and Bank of Ireland are also among those offering up to six times the salary.
Strutt continued: “For many first-time buyers, the idea of borrowing up to 6.5 times salary is not attractive, but they will do it if it means they can get on the property ladder. Policies like this (6.5 times salary) mean that many first-time buyers will be less reliant on the bank of mum and dad.”
