With house prices having risen in recent years at a much higher rate than salaries, the need to borrow more money in order to climb the property ladder is greater than ever.
In response to this, many lenders now offer high income multiples and consider a customer’s lifestyle and ‘ability to repay’ when determining how much they are willing to lend.
Plus, some lenders also offer extended mortgage terms, possibly even taking the mortgage into retirement. Therefore, does the typical ‘25-year mortgage’ still exist?
The Council of Mortgage Lenders’ figures show that those who do make it onto the property ladder are stretching their purse-strings to the limit, paying 18.7 per cent of their income to cover mortgage interest payments – the highest level since 1992. This figure could be higher for those with self-cert mortgages that are far beyond their affordability.
With lenders developing products to meet these needs, and customers willing to stretch their affordability, brokers could find themselves under pressure to push the boundaries of the customer’s affordability.
An advantage of being part of a network is that you are supported in providing professional advice in line with your responsibilities under ‘Treating Customers Fairly’ to offer clients loans that they can comfortably afford now and in the future.
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Views from the industry
