Nationwide Building Society has changed its income multiples to up to 6.5 times salary for remortgages where the borrower isn't increasing the loan amount. The move is designed to help those whose circumstances have changed since they took out their mortgage, specifically those whose income levels have dropped. It's also aimed at those who may no longer meet other lenders' tightened affordability criteria.
Which borrowers can get 6.5 times income multiples?
Only people who are remortgaging from an existing mortgage deal will be eligible to borrow at the new, higher income multiple. In addition, the new remortgage deals at the higher multiples are only for those looking to keep their loan at the same level and for properties where the loan amount is up to 90% loan-to-value. While it is helpful for those looking to remortgage to a lower rate or to move from a standard variable rate to a fixed rate, it can't be used as a way to extend borrowing further. Borrowers will also need to meet Nationwide's other lending criteria which, as a prime lender, means having a strong credit rating.
The new income multiples are likely to be attractive to individual borrowers who have taken a pay cut since taking out their original mortgage deal, as well as joint borrowers where one of the home owners has either stopped working or reduced their hours, perhaps because of redundancy, family commitments or retirement. Nationwide also states it should help "mortgage prisoners", who have a good credit rating but are unable to qualify for a better deal with another lender.
Should I borrow at 6.5 times my salary?
While the remortgage deal from Nationwide is aimed at those who are stuck on higher rates with other lenders or whose circumstances have changed, it is worth considering whether you can afford the payments, which will represent a relatively high proportion of your take-home pay. This is particularly the case in an environment where the cost of living is going up and you are likely to have to spend significantly more on essentials, such as food and energy bills.
It's a good idea to talk through your options with an independent mortgage adviser before taking out a new mortgage or remortgage, as they will be able to scour the market for the best deal for your individual circumstances. If you haven't got a mortgage broker, you could use the whole-of-market online broker Habito*, whose service we have vetted. There is also useful information on the maximum income multiples available from other lenders in our article "How much can I borrow on my mortgage?" - One lender will lend up to 7 times income to those who met certain strict criteria.
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