Suffolk Building Society is making it easier for first-time buyers who have been renting to take out a mortgage.
The lender has announced it will lend up to 5.49 times an applicant’s income if they have a track record of paying their rent.
Typically, lenders will provide mortgage loans which are 4.5 times a customer’s income. However, recently, the rules changed in this area meaning lenders can provide more loans to borrowers which are at a higher loan-to-income ratio.
Suffolk Building Society hopes its change, introduced today, will support more first-time buyers to get onto the property ladder.
It said applicants would need to demonstrate 12 months of paying a rental amount that is within 10% of their prospective new monthly mortgage payments.
For example, if a couple pays £1,500 rent per month, they could be considered for a monthly mortgage payment up to £1,650.
The same enhanced multiplier of 5.49 also applies on applications where at least one applicant earns over £75,000. Previously this threshold was set at £100,000.
Charlotte Grimshaw, head of intermediaries at Suffolk Building Society, 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 current situation has put homeownership out of reach for many. The enhanced income multiples, when combined with other affordability-boosting tools, such as five-year fixed rates, or longer terms to reduce monthly payments, should help some of our renters achieve their dream of buying a home.”
Borrowers can access Suffolk Building Society’s mortgages through a broker.
