Nationwide has reduced the minimum income requirement for first-time buyers using its Helping Hand mortgage from £40,000 to £35,000, it was announced today.
The mortgage lender had raised the threshold for single applicants from £30,000 to £35,000 in November and then increased it again in January to £40,000.
But today’s reduction will widen the appeal of the product which allows eligible buyers to borrow more in relation to their income.
This is how it works. Helping Hand allows first-time buyers to take out one of Nationwide’s five or 10-year fixed rates up to 95% loan-to-value (LTV). This means the buyer or buyers will need at least a 5% deposit.
By applying though the Helping Hand scheme potential borrowers can gain a 33% uplift compared to Nationwide’s standard lending at 4.5 times income.
For joint applications the minimum combined income has remained at £55,000. For single applicants the minimum income is now £35,000.
Under the scheme, first-time buyers also receive £500 cashback when they complete their mortgage with Nationwide and can also benefit from an additional cashback of up to £500 if they purchase an energy-efficient property through Nationwide’s Green Reward.
Nationwide said it had previously increased the minimum income rules on Helping Hand in order to manage its lending and to comply with regulations. Indeed, lenders must abide by a rule which means only 15% of their lending can be for loans which are 4.5 times income or more.
Helping Hand offered six times borrowers’ income and so income restrictions had to be introduced to manage demand.
Henry Jordan, Nationwide’s director of homes, said: “We continue to do all we can to put first-time buyers first and aim to set our Helping Hand minimum income requirements at levels that give it the widest appeal.
“Helping Hand has proven extremely popular with prospective homeowners, especially since we extended it to six times income, and we continue to provide as much support as possible, whilst remaining within the high loan-to-income lending regulations.
“While we are pleased to be able to reduce the minimum income requirement for sole applicants again, we want to do more and that’s why we continue to call for a review of the 15% limit.”
