The Nationwide Building Society now allows homeowners to take out mortgage loans of up to 6.5 times their annual income, compared to 4.49 times.

An increased limit is available for those who want to re-mortgage without additional loans, on loans that cover up to 90 percent of the property value.

However, it will not be available to those who want to change the amount of the mortgage.

This means that it can help those whose family income has fallen since they took out their last mortgage – meaning that otherwise they will not be able to qualify for a new deal.

The big leap: nationwide maximum loan-to-earnings income increases 6.5-fold for re-mortgage applications that do not require additional borrowing

This may include couples in which one of the partners has stopped working for reasons such as childcare, dismissal or retirement, or has switched from employment to self-employment.

Nationwide also states that additional loans can be a “lifeline” for mortgage inmates, although those with bad credit histories are unlikely to qualify.

Since 2014, banks have been subject to regulatory limits on the number of mortgages they can offer if someone borrows more than 4.5 times their salary.

This means that most lenders refrain from offering mortgages more than 4.5-5 times the annual income of those who apply.

Relaxing nationwide this availability restriction could significantly increase homeowners ’borrowing opportunities.

For example, a borrower with an annual income of £ 50,000 will now be able to borrow up to £ 325,000 compared to £ 237,500 at a profit of 4.75 times.

Several other lenders are willing to increase mortgages to 5-fold profits, but they are usually reserved for high-income people.

For example, HSBC allows people to take loans of up to 5.5 times their income, but only to those who earn £ 100,000 or more. Halifax also allows you to take loans of up to 5.5 times the income, but only if the annual income is 75,000 pounds or more.

Nationwide’s new multiple income has no such barriers, meaning it will benefit borrowers who have reduced incomes and otherwise would not be able to re-mortgage on a new deal based on limiting the availability of most lenders.

Henry Jordan, director of mortgages at the Nationwide Building Society, said: “By maximizing loan income, we are giving people who don’t need extra loans more opportunities to change lenders and save money, and possibly helping these mortgage inmates so far have not been able to reschedule for a more lucrative deal.

David Holingworth, deputy director of mortgage broker, L&C Mortgages added: “Those who borrow on the basis of such will have an accurate track record of their payments and will feel that they should be able to take advantage of the best deals by switching lender.

“So it’s nice to see that lenders are thinking about how they can provide more flexible solutions for the right target groups.”

Who will it help?

This transition from Nationwide could be a lifeline for some borrowers, especially those whose income may have declined after obtaining the original mortgage.

It could be anyone whose income has dropped, possibly due to a pandemic, career change, layoffs or childcare.

It can also benefit mortgage inmates who, despite making monthly payments, are struggling to meet current accessibility criteria to qualify for a new mortgage.

Mortgage inmates are people who are trapped by their current mortgage lender and unable to make a new deal, often due to changes in their income or non-compliance with stricter availability rules.

Upon completion of the initial transaction, they will switch to their lender’s standard variable rate and thus will pay more. The average standard variable rate is 4.34 percent according to L&C Mortgages.

Mortgage Prisoners: A Step Across the Country May Help Some People Who Are Currently Stuck at their Lender's Standard Variable Rate and Cannot Switch to a New Mortgage

Mortgage Prisoners: A Step Across the Country May Help Some People Who Are Currently Stuck at their Lender’s Standard Variable Rate and Cannot Switch to a New Mortgage

Chris Sykes, a mortgage adviser at Private Finance, said: “This is a very nice change and could be a lifeline for some borrowers who are either mortgage inmates or have had their income dropped significantly recently.

“For example, someone who was fired and who does not yet have the same level of salary, someone received a mortgage on rental income, but now became self-employed and still does not earn enough to justify the same mortgage.”

However, while the loan-to-income ratio is important, it should be noted that any fixed costs, including other loans, can be deducted from your total income, reducing your maximum ability to borrow.

Borrowers also need to prove that they can still afford mortgage payments if they grow 3 percent above the standard lender’s variable rate.

Individuals with bad credit ratings are also unlikely to qualify for additional loans.

“It’s all tested for affordability,” Sykes says, “so the lender wouldn’t have given that income 6.5 times more if it wasn’t affordable.

“However, similar to similar mortgages can often be emphasized at a slightly lower rate, although there is evidence that they can pay that amount.

“So it’s a product that can really help inmates.”

The best mortgage rates and how to find them

Finding a mortgage can seem daunting because of the huge range of offers.

This is Money works with an independent free mortgage broker L&C to help you find the right home loan.

Ours mortgage calculator may allow you to filter offers to see which ones match your home’s value and deposit level.

You can also compare different fixed rate mortgage lengths, from two-year to five-year and even ten-year, with monthly and total costs listed.

Use the tool at the link below to compare the best deals, considering both fees and bids.

> Compare the best mortgage deals available now

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