First-time buyers can now borrow more with Nationwide BS

As well as increasing the amount that first-time buyers can borrow, the building society also cut its fixed mortgage rates.

In a bid to help first-time buyers get on the property ladder, Nationwide BS can now lend up to six times a borrower’s income on some of its ‘Helping Hand’ mortgage products.

It claims it is the first major high street lender to increase its loan-to-income ratio to this level.

Nationwide BS introduced its Helping Hand mortgage products, which offer a higher loan-to-income ratio than its standard products, in 2021, to help prospective first-time buyers achieve their homeownership goals.

By increasing its maximum loan-to-income ratio to six, Nationwide BS aims to tackle some of the affordability issues that many first-time buyers face in a period of relatively high house prices and mortgage rates.

It could be particularly useful for first-time buyers in London and the South East where house prices are particularly high.

Most standard mortgage lenders will typically only lend up to four or five times a borrower’s income, with Nationwide BS previously offering a loan-to-income ratio of 5.5 on some of its ‘Helping Hand’ deals.

After the increase to the loan-to-income ratio by Nationwide BS, an individual first-time buyer with an annual income of £40,000 could now borrow up to £240,000, compared to just £220,000 if they could only borrow up to 5.5 times their income.

At the same time, Nationwide BS has also increased the maximum amount you can borrow on its 90% and 95% LTV mortgages from £500,000 to £750,000.

“Helping Hand has supported around 40,000 people onto the property ladder since we launched it three years ago. We want to do more and are boosting the scheme to six times income and increasing the maximum loan size,” Debbie Crosbie, Nationwide’s Chief Executive, commented.

How to qualify

Nationwide BS only allows first-time buyers to borrow up to six times their annual income on a five- or 10-year fixed rate deal with a maximum loan-to-value (LTV) of 95%.

This could be off-putting to some first-time buyers who may be reluctant to lock in a fixed rate for this length of time as mortgage rates appear to be on a downwards trend.

However, it’s impossible to predict the future, so some first-time buyers may be happy to fix for five years or more in case mortgage rates started rising again.

As with all ‘Helping Hand’ products from Nationwide BS, individual borrowers need a minimum income of £30,000 while joint applicants need to earn at least £50,000 combined.

The lender will also check the credit history of each applicant and run affordability assessments to ensure that, even if they borrow a larger multiple of their income, first-time buyers can still afford to repay their mortgage.

Cutting rates

Along with boosting the amount that first-time buyers can borrow, Nationwide BS also cut some of its fixed mortgage rates.

It lowered its first-time buyer rates by up to 0.31 percentage points , which means borrowers with a 5% deposit can now access a five-year fixed rate below 5%.

Many other mortgage lenders have also cut rates in recent weeks and, with the Bank of England expected to lower the base rate further before the end of the year, it’s possible that rates will continue to drop.

This is good news for those wanting to start the process of buying their own home, but many may still face affordability challenges.

Initiatives by lenders, such as Nationwide BS lending up to six times a borrower’s income, can help first-time buyers get over these barriers, but it’s important they consider all their options.

It’s worth comparing first-time buyer mortgage rates to see the deals available, bearing in mind that the lowest rate may not necessarily be the most suitable or cost-effective choice for your situation.

It can be useful to speak to a mortgage broker to get professional advice on your own circumstances to help you find the right mortgage deal for you.

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