Suffolk Building Society has increased its maximum income multiple to 5.49 for applicants with a proven rental track record, in a move aimed at easing the path to homeownership for first-time buyers.
For the first time, the mutual will take rental history into account when assessing affordability. Applicants must show 12 months of rent payments within 10% of their proposed mortgage repayments. A couple paying £1,500 a month in rent, for example, could be considered for mortgage payments of up to £1,650.
The enhanced 5.49 multiplier will also apply to applications where at least one applicant earns more than £75,000, lowering the previous threshold of £100,000.
Charlotte Grimshaw, head of intermediaries, said: “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.
“Many renters have the means to meet sizeable monthly mortgage repayments – often paying more than they would on a mortgage, whilst 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 enhanced income multiples, when combined with other affordability-boosting tools, such as 5-year fixed rates, or longer terms to reduce monthly payments, should help some of our renters achieve their dream of buying a home.”
The change is part of a wider review of lending criteria. The society will now allow capital raising to purchase a property without simultaneous completion, up to a maximum of 80% loan-to-value. This could help older borrowers secure a home in readiness for retirement or allow a buyer to purchase an investment property ahead of selling their current one.
Other adjustments include permitting capital raising to purchase an onward property in a limited company, and allowing deposits sourced from an applicant’s own limited company when buying a property.
Grimshaw added: “We’re always reviewing our criteria and taking broker feedback on board to see what changes we could make to improve our overall proposition.
“We understand that not every customer or application fits neatly into a box, so we consider each one individually and with understanding.”
