Tipton & Coseley Building Society has revised its affordability criteria, allowing borrowers to access higher income multiples and potentially increase their borrowing capacity by as much as £19,000.
The mutual has increased its standard loan-to-income (LTI) ratio to five times income across its entire mortgage range, with the new measure applying even to loans of up to 95% loan to value.
In addition, the society has removed the minimum income requirement altogether.
In a further change to affordability assessments, stress tests will now be based on the borrower’s selected mortgage product rather than a generic rate. According to the lender, this will ease affordability calculations for many applicants, particularly those choosing lower-rate products.
“These important changes will deliver a more tailored approach
to affordability assessments”
Andy Millard, head of intermediary distribution at Tipton & Coseley, said the changes would support a more tailored and realistic view of a borrower’s circumstances.
“These important changes will deliver a more tailored approach to affordability assessments, with full consideration of each borrower’s individual circumstances,” he said.
“It creates scope for us to increase the support we offer to brokers and applicants, while still lending responsibly.”
Tipton has indicated that under the revised model, a household with the UK median disposable income of £36,700 and no outstanding debts could be eligible for up to £19,000 more in borrowing. The estimate is based on figures from the Office for National Statistics, published in May this year.
The move is likely to be welcomed by mortgage intermediaries and borrowers alike, as affordability constraints remain a key issue for many would-be buyers, particularly first time purchasers and those with limited deposits.
Millard added: “Our purpose is to help our customers achieve their most important financial goals and often that includes securing a home of their own. Whether it’s a first time buyer, or someone needing a lending solution later in life, we want to remove any unnecessary barriers and help even more customers with their home ownership plans.
“In addition, we’ll always listen to what brokers tell us they need from a provider and develop our proposition accordingly.”
