Mortgage lender Habito* has announced that its Habito One mortgage now allows borrowers to get a mortgage worth up to 7 times their salary. The average UK mortgage only allows up to 4.5 times.
As house prices in the UK have risen 29 times more than wages in the last 50 years, Habito states that many people have been priced out of buying properties, and that its revised lending criteria is designed to “close the gap between wages and house prices”.
In this article, we explain everything you need to know about the changes to Habito One mortgages, including if you are eligible to borrow up to 7 times your income, what the interest rates are, and the additional lending fees you can expect.
Habito One mortgages
Habito’s fixed-rate residential mortgage, which now allows you to borrow up to 7 times your salary, is called Habito One. It has a single fixed rate for up to 40 years, so your monthly repayments stay the same throughout the entire term, and you can choose to have no exit fees should you change your mind at any stage.
Eligibility
In order to be eligible for a Habito One mortgage, you must be either: a first-time buyer, a homemover, or remortgaging. You must be living in England or Wales. The property you are seeking to purchase must be between £50,000 to £10m. Habito One mortgages are currently available up to 90% LTV - so you can get one with as little as 10% deposit - and Habito has stated that it hopes to extend this to 95% LTV in due course.
There are additional criteria to bear in mind for those that want to borrow more than the average of 5 times annual income. To borrow up to 7 times your salary, you must earn at least £25,000 if you work in any of the following jobs: firefighter, nurse, paramedic, doctor, police, accountant, barrister, teacher, engineer, lawyer, dentist, architect, surveyor, or vet.
If you do not work in any of the above jobs, you need to earn at least £75,000.
For those looking for a joint mortgage, if one of you is eligible and the other is not, Habito will multiply the eligible income up to 7 times and the remaining income up to 5 times in order to determine your combined maximum borrowing capacity. Habito reserves the right, however, to insist on the usual 5 times income “if, for whatever reason, it works out financially better for you”.
Interest rates
The interest rate on a Habito One mortgage depends on 2 factors: the LTV and the length of the mortgage term. You can switch down to a lower interest rate as you pay off more of your mortgage, but there may be a fee to do so.
Below is a summary of the interest rates you can expect from a Habito One mortgage. The following rates are effective from 9 December 2021 and are subject to change or withdrawal at Habito’s discretion.
| 60% LTV | |
| Term | Interest Rate |
| 10-15 years | 2.99% |
| 16-20 years | 3.29% |
| 21-25 years | 3.49% |
| 26-30 years | 3.59% |
| 31-35 years | 4.25% |
| 36-40 years | 4.45% |
| 75% LTV | |
| Term | Interest Rate |
| 10-15 years | 3.29% |
| 16-20 years | 3.39% |
| 21-25 years | 3.59% |
| 26-30 years | 3.69% |
| 31-35 years | 4.35% |
| 36-40 years | 4.55% |
| 80% LTV | |
| Term | Interest Rate |
| 10-15 years | 3.59% |
| 16-20 years | 3.69% |
| 21-25 years | 3.84% |
| 26-30 years | 3.94% |
| 31-35 years | 4.60% |
| 36-40 years | 4.80% |
| 85% LTV | |
| Term | Interest Rate |
| 10-15 years | 3.89% |
| 16-20 years | 3.99% |
| 21-25 years | 4.14% |
| 26-30 years | 4.24% |
| 31-35 years | 4.90% |
| 36-40 years | 5.10% |
| 90% LTV | |
| Term | Interest Rate |
| 10-15 years | 4.39% |
| 16-20 years | 4.49% |
| 21-25 years | 4.64% |
| 26-30 years | 4.74% |
| 31-35 years | 5.40% |
| 36-40 years | 5.60% |
There are no early repayment charges (ERCs) on the above Habito One mortgages. Those that do not mind ERCs can opt for alternative Habito mortgages which have ERCs but come with lower interest rates.
Fees
There are no ERCs or exit fees on a Habito One mortgage. However, there are still some extra charges that you will have to pay, including:
- Product fee: £1,995.
- Electronic transfer fee: £35.
- Valuation fee: £350 for a purchase or free for a remortgage.
Is a Habito One mortgage right for you?
The main selling point behind a Habito One mortgage is that it allows you to borrow up to 7 times your salary - well beyond the average of 5 times - as well as the potential to fix the mortgage for up to 40 years. However, it is important to consider if doing either of these things would actually be a wise decision for you. It is crucial to look beyond the “7 times your salary” headline and assess the practicalities.
For example, if you are looking for a joint mortgage and your partner does not also meet the eligibility criteria, Habito reserves the right to only offer up to 5 times your income. In addition, the higher LTV comes with higher interest rates, so bear in mind that although you can secure a Habito One mortgage with a smaller deposit, in doing so you will be saddling yourself with larger monthly repayments. There is also a higher than average product fee of £1,995 on a Habito One mortgage, compared to other lenders, many of whom offer fee-free options.
Be sure to use our mortgage best buy calculator to find the best offer for you and your property, or check out the following articles:
- How much can I borrow on my mortgage?
- Which are the best 95% LTV mortgages – and should I get one?
- Is a 90% LTV mortgage right for you? How to find the best deals
- Which are the best 80% LTV mortgages?
Alternatively, you can read our full Habito review to help you decide if it is the right mortgage broker/lender for you.
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