Leeds Building Society has launched Income Plus mortgages aimed at helping more first-time buyers secure loans.
These new mortgages will enable first-time buyers to borrow up to £66,000 more on average.
The Income Plus mortgages will allow those with a minimum household income of £40,000 to borrow up to 5.5 times their earnings, an increase from the previous limit of 4.5 times under standard lending.
As a result, first-time buyers can expect to borrow an average of £356,000 through Income Plus, a jump from £290,000 under standard lending.
The mortgages are available at up to 95% loan-to-value (LTV) for new build houses, and 85% LTV for new build flats.
Single and joint borrowers, including self-employed individuals, are eligible.
The Income Plus mortgages can also be combined with the society’s existing green affordability benefit, which makes affordable lending more accessible for new build homes bearing an Energy Performance Certificate of A or B.
Income Plus mortgages will be available exclusively through the Society’s intermediary partners on its Mortgage Hub platform.
Rates for these seven mortgages range from 4.40% at 75% LTV (£999 product fee) to 5.15% (£999 product fee, £500 cashback) and 5.19% (no product fee, no cashback) at 95% LTV.
All mortgages are fixed for 5-years and come with a standard home valuation survey costing up to £999.
Leeds Building Society has urged the Government to increase the supply of homes for first-time buyers.
With Income Plus available at up to 95% LTV on new build houses, it hopes to encourage developers to assist first-time buyers facing affordability issues.
Martese Carton, director of mortgage distribution at Leeds Building Society, said: “The launch of Income Plus and other improvements we’re making will come as welcome news for many of our intermediary partners across the UK who work really hard to support the increasing number of first-time buyers facing affordability constraints.
“By combining a high loan-to-value and loan-to-income with generous but responsible affordability modelling, it supports intermediaries in helping overcome some of the main barriers facing would-be homeowners: earnings being outstripped by house prices and the difficulty of saving a large deposit.
Carton added: “Our partners can offer clients advice built on certainty and access enhanced availability of lending options, as we demonstrate that every yes matters – to intermediaries, to first-time buyers and to us as a lender.
“Understanding the pressures the intermediaries are facing, we are proud to launch our new product along with a dedicated affordability calculator to make supporting the needs of their clients as straightforward as possible.”
David Hollingworth, associate director at L&C Mortgages, said: “Leeds Building Society is a lender that puts first-time buyers at the heart of its proposition and the introduction of Income Plus should help more advisers’ customers take the first step onto the ladder.
“We know that first-time buyers are not only grappling with building a deposit but also with the affordability constraints that high house prices bring.
“Income Plus seeks to address this by providing an alternative option for those with a smaller deposit but importantly also enabling a higher borrowing amount for those that can demonstrate it will be affordable.”
David O’Leary, executive director at Home Builders Federation, said: “The housing market has never been tougher for first-time buyers, so it’s encouraging to see Leeds Building Society’s ongoing commitment to new build homebuyers.
“The lack of appropriate mortgage finance is a key barrier for many households who would otherwise be able to take their first steps on the housing ladder and this suppression of effective demand for new homes is holding back housing delivery.
“If we are to come anywhere close to meeting the Government’s ambitious housing supply targets, lenders stepping up to the plate and supporting first-time buyers will be essential.”
